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~.* 


A  TREATISE 


ON    THE 


LAW  OF  PARTNERSHIP 


BY 

WALTER  A.  SHTJMAKER 


SECOND   EDITION 


ST.  PAUL,  MINN. 

KEEFE-DAVIDSOX  CO. 

1905 


Copyright,  1901, 

BY 

KEEFE-DAV1DSON  LAW  BOOK  CO. 


Copyright,  1905, 

BY 

KEEFE-DAVIDSON  CO. 


STATE  JOURNAL  PRINTING  COMPANY, 
Printers  and  Stereotypers, 
MADISON,  wis. 


PREFACE  TO  FIRST  EDITION. 


The  important  position  which  the  contract  of  partnership 
has  held  for  more  than  a  century  in  the  commercial  affairs  of 
England  and  the  United  States  has  been  such  that  the  law 
bearing  on  it  has  been  subjected  to  extensive  judicial  investi- 
gation, and  after  undergoing;  many  changes,  is  at  the  present 
rime  well  settled  in  most  of  its  phases.  This  fact  appears 
to  justify  the  seeming  presumption  of  entering  on  a  field  of 
jurisprudence  embraced  by  the  works  of  such  eminent  writers 
as  Lord  Lindley  and  Theophilus  Parsons.  What  was  im- 
possible during  the  formative  period  in  which  they  wrote 
now  seems  practicable, — the  presentation  of  a  complete  analy- 
sis in  general  propositions  of  the  law  of  partnership;  in  other 
words,  a  substantial  codification  based  not  on  legislative  en- 
actment, but  on  the  concensus  of  judicial  decision.  Such  a 
presentation,  invaluable  to  the  student,  and  nearly  as  much 
so  to  the  practitioner,  lias  been  the  aim  in  formulating  the 
black  letter  paragraphs  in  the  present  work.  In  the  text,  the 
general  statemenl  of  the  law  is  elaborated,  and  its  history  and 
growth  outlined. 

The  scope  ami  theory  of  the  work  render  alike  unnecessary 
and  impracticable,  a  complete  digest  of  the  cases.  The  lead- 
ing cases  illustrating  the  growth  of  the  law  arc  fully  cited; 
on  all  novel  or  disputed  propositions  the  authorities  have  been 
exhaustively  collated,  and  on  well  settled  rules  sufficient  cases 
are  cited  to  thoroughly  establish  and  illustrate  the  doctrine, 
including  all  the  late  cases  of  importance.  This  has  required 
an    examination    of   authorities   greater    than    would    he    de- 


iv  PREFACE. 

tnanded  by  any  other  plan  of  presentation.  The  aim  in  both 
text  and  citations  has  been  to  make  a  boot  \'<>v  all  the  states, 
and  any  apparenl  predominence  of  citations  from  certain 
states  will  be  found  due  to  the  prominenl  pari  played  by  such 
states  in  establishing  the  commercial  law  of  the  United 
States. 

Considerable  work  on  this  manual  has  been  done  by  an- 
other, lmt  nil  such  T  have  subjected  to  rigid  scrutiny  and  re- 
vision. W.  A.  S. 


PREFACE  TO  SECOND  EDITION. 


In  view  of  the  general  approval  with  which  the  first  edi- 
tion was  received,  the  preparation  of  the  second  has  involved 
little  besides  the  presentation  of  the  result  of  the  recent  de- 
cisions. Every  decision  on  the  subject  since  the  first  edition 
was  issued  has  been  examined,  and  not  only  all  that  present 
novel  applications  of  the  law,  but  all  that  bear  on  unsettled 
questions,  have  been  added.  Moreover  a  considerable  num- 
ber of  cumulative  decisions,  selected  with  special  reference  to 
their  exhaustiveness  of  discussion,  have  been  inserted.  Few 
changes  in  the  text  have  been  found  needful,  but  such  as 
might  clarify  the  statement  and  better  present  the  results  of 
recent  holdings  have  been  made.  W.  A.  S. 


TABLE  OF  CONTENTS. 


CHAPTER  I. 

WHAT  CONSTITUTES  A  PARTNERSHIP. 

§  1.     Partnership  Defined. 

2.  Essential  Elements. 

3.  Contract  Between  Partners. 
4-5.  Delectus  Personarurn. 
6-7.  Subpartnerships. 

8.  Sharing  Profits. 

9.  Former  Doctrine. 

10.  Modern  Doctrine. 

11.  Tests  of  Partnership. 

12.  Mutual  Agency  as  a  Test. 

13.  Intention  the  Real  Test.     - 

14-15.        What    Must    be     Intended— Common     Ownership     of 
Profits. 

16.  Sharing  Profits  and  Losses  as  Evidence  of  Intention. 

17.  Sharing  Both  Profits  and  Losses. 

18.  Sharing  Profits,  With  Nothing  Said  About  Losses. 

19.  Sharing  Profits,  With  Stipulation  Against  Losses. 

20.  Sharing  Gross  Returns. 

21.  Sharing  Losses  Only. 

22.  Common  Stock  or  Capital. 

23.  Questions  of  Law  and  Fact. 

24.  Contracts  for  Future  Partnerships. 

25.  Associations  Not  for  Profit. 

26.  Co-Ownership  Distinguished. 

27.  Corporations  Distinguished. 

28.  Promoters  of  Corporations  or  Joint  Stock  Companies. 
29-31.  Stockholders  in  Illegal  or  Defective  Corporations. 
32-33.  Partnership  as  to  Third  Persons. 

34.         By  Sharing  Profits. 
35-37.         By  Holding  Out. 


iii  TABLE  OF  CONTENTS. 

CHAPTER  II. 

CLASSIFICATIONS   AND   DEFINITIONS. 

§  38-40.  Partnerships  Classified. 
41.         Universal  Partnerships. 
!_'.        General  Partnerships. 
43.         Special  or  Particular  Partnerships. 
II.         Trading  and  Nontrading  Partnerships. 

15.  Partners  Classified. 


CHAPTER  III. 

CONTRACT  OF  PARTNERSHIP. 

§  46.  General  Requisites. 

47.  Formalities. 

48-49.  Who  May  Become  Partners. 

50.  Consideration. 

51.  Purposes  of  Partnership. 

52.  Illegal  Partnerships. 


CHAPTER  IV. 

FIRM  AS  AN  ENTITY. 

§  53.     At  Common  Law. 
54-55.     Limited  Recognition  as  an  Entity. 


CHAPTER  V. 


FIRM  NAME  AND  GOOD  WILL. 


§  56.     Necessity  of  Firm  Name. 
57-58.     Use  and  Purpose  of  Firm  Name. 
59-60.     What  Name  May  be  Adopted. 
60a-60cZ.  Use  of  Firm  Name  After  Dissolution. 


CHAPTER  VI. 

CAPITAL  OF  FIRM. 

§  61.     Definition  and  Nature. 

62.     What  May  be  Contributed. 
C3-G5.     Rights  of  Partners. 


66-68 
69-71 
72-73 

74 
75-76 
77-78 
79-80 

81 


TABLE  OF  CONTENTS.  ix 

CHAPTER  VII. 

PARTNERSHIP  PROPERTY. 

What  Constitutes. 

How  Title  is  Held. 

Nature  of  Partner's  Interest. 

Sale  or  Partition. 

Proportionate  Share  of  Each  Partner. 

Attachment  or  Execution  for  Individual  Debt  of  Partner. 

Conversion  of  Firm  Realty  Into  Personalty. 

Changing  Joint  Into  Separate  Property,  and  Vice  Versa. 


CHAPTER  VIII. 

RIGHTS   AND   LIABILITIES   OF   PARTNERS    INTER    SE. 

§  82.  Articles  of  Partnership. 

83.  Construction  of  Articles. 

84.  Right  to  Participate  in  Management. 

85.  Duty  to  Observe  Good  Faith. 

86.  Obtaining  Private  Benefits. 
87-88.  Right  to  Carry  on  Separate  Business. 

89.  Right  to  Contribution  and  Indemnity. 

90.  Right  to  Compensation. 
91-92.  Right  to  Interest  on  Balances. 

93.  Partnership  Accounts. 

94.  Duty  to  Conform  to  Partnership  Articles. 

95.  Duty  to  Exercise  Care  and  Skill. 
96-98.  Power  of  Majority. 

99-100.  Division  of  Profits. 

101.  Expulsion  of  Partner. 

102-103.  Partner's  Lien. 


CHAPTER  IX. 

RIGHTS  AND   LIABILITIES  OF   PARTNERS   AS  TO   THIRD 
PERSONS. 

§  104.  Power  of  Partner  to  Bind  Firm. 
105-106.         Actual  Authority. 
107-108.         Apparent  or  Implied  Authority. 
109-110.         Restriction  by  Dissent. 

111-112.  Liability  on  Contracts. 


TABLE  OF  CONTENTS. 

113.  Liability  for  Torts,  Frauds  and  Breaches  of  Trust. 

113a.  Liability  for  Crime. 

II  !    lir,.  Nature  of  Liability. 

116.  Extent  of  Liability. 

117.  Commencement  of  Liability. 

118.  Termination  of  Liability. 

119.  For  Future  Acts. 
120-121.  Notice  of  Dissolution. 

122.  For  Past  Acts. 

L23.  Application  of  Assets  to  Liabilities. 

124.  Application  by  Partners. 

125-126.  Application  by  Court. 

127-128.  Priorities  in  Firm  Property. 

129-132.  Priorities  in  Separate  Property. 


CHAPTER  X. 

ACTIONS. 

§  133.     Actions  in  Firm  Name. 

134.  Actions  by  the  Firm. 

135.  Disqualification  of  One  Partner  to  Sue. 

136.  Actions  against  the  Firm. 

137.  Actions  Between  Partners. 

138.  Actions  Between  Firms  "With  a  Common  Member. 

139.  Actions  on  Individual  Obligations. 
140-141.     Suits  in  Equity. 


CHAPTER  XI. 

DISSOLUTION. 

§  142.  How  Effected. 

143.  By  Operation  of  Law. 

144.  By  Act  of  Parties. 

145.  By  Decree  of  Court. 

146.  Grounds  for  Dissolution. 

147.  Rights,   Powers,  and  Liabilities  after  Dissolution. 

148.  Of  Partners  Generally. 

149.  Of  Liquidating  Partners. 

150.  Of  Surviving  Partners. 
151-152.        Of  Estate  of  Deceased  Partner. 

153.         Of  Creditors. 


TABLE  OF  CONTENTS.  XL 

CHAPTER  XII. 

JOINT-STOCK   COMPANIES. 
§  154-155.     Definition  and  Nature. 


CHAPTER  XIII. 

LIMITED    PARTNERSHIPS. 
§  15C-157.     Definition   and  Nature. 


LAW  OF  PARTNERSHIP. 


CHAPTER  I. 

WHAT  CONSTITUTES  A  PARTNERSHIP. 

1.  Partnership  Defined. 

2.  Essential  Elements. 

3.  Contract  between  Partners. 
4-5.  Delectus  Personarum. 
6-7.  Subpartnerships. 

8.  Sharing  Profits. 

9.  Former  Doctrine. 

10.  Modern  Doctrine. 

11.  Tests  of  Partnership. 

12.  Mutual  Agency  as  a  Test. 

13.  Intention  the  Real  Test. 

14-15.  "What  Must  be  Intended — Common  Ownership  of  Profits. 

16.  Sharing  Profits  and  Losses  as  Evidence  of  Intention. 

17.  Sharing  both  Profits  and  Losses. 

18.  Sharing  Profits,  "With  Nothing  Said  about  Losses. 

19.  Sharing  Profits,  with  Stipulation  against  Losses. 

20.  Sharing  Gross  Returns. 

21.  Sharing  Losses  Only. 

22.  Common  Stock  or  Capital. 

23.  Questions  of  Law  and  Fact. 

24.  Contracts  for  Future  Partnerships. 

25.  Associations  not  for  Profit.  , 

26.  Co-Ownership  Distinguished. 

27.  Corporations  Distinguished. 

28.  Promoters  of  Corporations  or  Joint  Stock  Companies. 
29-31.  Stockholders  in  Illegal  or  Defective  Corporations. 
32-33.  Partnership  as  to  Third  Persons. 

34.  By  Sharing  Profits. 

35-37.  By  Holding  out. 

1 


WHAT  CONSTITUTES  A  PARTNERSHIP. 


PaETNEESHIP    1  >]•:  FIXED. 

I.  Partnership  is  the  relation  subsisting  between  two  or 
more  persons  who  have  contracted  together  to  share,  as 
common  owners,  the  profits  of  a  business  carried  on  by 
all  or  any  of  them  on  behalf  of  all  of  them. 

Most  of  the  definitions  of  a  partnership  to  be  found  in  the 
books,  a  few  of  which  arc  sel  out  below  in  the  notes,1  are 
fairly  open  to  the  criticism  that  they  either  omit  entirely,  or 
fail  to  give  prominence  to,  the  qualification  that  the  profits 
must  be  shared  between  the  contracting  parties  as  common 

i  Various  definitions  of  partnership: 

"Partnership  is  the  association  of  two  or  more  persons  for  the  pur- 
pose of  carrying  on  business  together,  and  dividing  its  profits  be- 
tween them."  Civ.  Code,  N.  Y.,  §  1283;  Civ.  Code,  Cal.,  §  2395;  Comp. 
Laws  Dak.  1887,  §  4027;  Rev.  Code,  N.  D.,  §  4370. 

"Partnership  is  the  relation  which  subsists  between  persons  who 
have  agreed  to  combine  their  property,  labor,  or  skill  in  some  busi- 
ness, and  to  share  the  profits  thereof  between  them."  Indian  Con- 
tract Act,  239. 

By  the  English  partnership  act  of  1890  (53  &  54  Vict.  c.  39),  which 
went  into  effect  January  1,  1891,  "partnership"  has  been  defined  as 
"the  relation  which  subsists  between  persons  carrying  on  a  business 
in  common,  with  a  view  to  profit."  Business,  within  the  meaning 
of  the  act,  includes  every  trade,  occupation,  or  profession.  The  act 
expressly  excludes  from  its  operation  joint-stock  companies,  cost- 
book  mining  companies,  and  many  others  which  differ  from  ordi- 
nary partnerships  in  many  particulars.  This  statutory  definition, 
taken  in  connection  with  the  other  sections  of  the  act,  is  now,  in 
England,  the  ultimate  test  applicable  to  the  determination  of  the 
question  whether,  in  any  particular  case,  a  partnership  does  or  does 
not  exist. 

"Partnership  is  a  contract  of  two  or  more  competent  persons  to 
place  their  money,  effects,  labor,  and  skill,  or  some  or  all  of  them, 
in  lawful  commerce  or  business,  and  to  divide  the  profit  and  bear 
the  loss  in  certain  proportions."  3  Kent,  Comm.  33.  Followed  in 
Waggoner  v.  First  Nat.  Bank,  43  Neb.  84,  61  N.  W.  112.  A  partner- 
ship is  the  relation  created  by  a  contract  between  two  or  more  per- 


PARTNERSHIP  DEFINED.  3 

owners  thereof,  and  not  merely  because  a  portion  of  them  is 
due  to  a  party  as  a  debt.  As  will  be  seen  hereafter,  this  com- 
mon ownership  of  the  profits  is  the  decisive  test  of  the  exist- 
ence of  a  partnership.2  This  objection  has  been  avoided  by  de- 
fining a  partnership  as  the  contract  relation  subsisting  between 
persons  who  have  combined  their  property,  labor,  or  skill  in 
an  enterprise  or  business  as  principals,  for  the  purpose  of 
joint  profit.3  But  this  definition  has,  in  turn,  been  criticised 
as  giving  a  synonym,  rather  than  a  definition,  as  mutual 
agency  results  from  partnership,  rather  than  partnership  from 
mutual  agency.4  This  matter  will  be  more  fully  considered 
in  a  succeeding  section  of  this  work.5 

A  partnership  is  often  called  a  contract,  but  this_is_inac- 
curate.  It  is  the  relation  or  status  resulting  from  a  contract, 
just  as  marriage  is  a  status,  and  not  a  contract.0     It  should 

sons  to  place  their  money,  effects,  labor,  or  skill,  or  some  or  all  of 
them,  in  lawful  commerce,  and  divide  the  profits  between  them.  In 
re  Gibb's  Estate,  157  Pa.  59,  27  Atl.  383. 

'•.  These  definitions  certainly  justify  the  statement  made  in  Meehan 
'  v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80,  Mechem's  Cases,  103, 
that  "the  various  definitions  of  a  partnership  have  been  approximate, 
rather  than  exhaustive."  While  it  is  true  that  a  partnership  is  all 
it  is  said  to  be  in  the  above  definitions,  something  more  is  necessary 
to  define  it,  for  all  the  conditions  named  might  be  present,  and  still 
no  partnership  exist,  as  in  the  case  of  a  servant  or  agent  sharing  in 
the  profits  as  compensation,  in  lieu  of  salary.  The  qualification 
needed  is  that  the  sharing  must  be  by  reason  of  a  common  owner- 
ship in  the  profits. 

^  See  infra,  §  10,  "Modern  Doctrine,"  and  infra,  §§  14,  15,  "What 
Must  be  Intended — Common  Ownership  of  Profits. 

8  1  Bates,  Partn.,  p.  1.  "A  partnership  is  a  voluntary,  unincor- 
porated association  of  individuals  standing  in  the  relation  of  prin- 
cipals for  carrying  out  a  joint  operation  or  undertaking  for  the  pur- 
pose of  joint  profit."  Dixon,  Partn.  1.  See,  also.  Cox  v.  Hickman, 
8  H.  L.  Cas.  268,  and  Eastman  v.  Clark,  53  N.  H.  276. 

*  Pooley  v.  Driver,  5  Ch.  Div.  471  et  seq.;  Meehan  v.  Valentine,  145 
U.  S.  611. 

t>  See  post,  §  121,  "Mutual  Agency  as  a  Test." 

«  In   this   respect,   the   definition   of  a  contract  given   in   3   Kent, 


4  WHAT  CONSTITUTES  A  PARTNERSHIP. 

also  be  noted  thai  the  won!  "partnership"  denotes  a  combina- 
tion of  persons,  and  not  merely  a  combination  of  capital.7 
"  So  ^unsatisfactory  haw  Been  Ehe  many  definitions  of  a 
"partnership,"  that  one  classic  writer  upon  the  subject,  with- 
out attempting  to  define  the  term,  contents  himself  with  point- 
ing ou1  the  Leading  ideas  involved  \n  the  term,8  and  this  is, 
perhaps,  after  all,  the  best  method  tf  conveying  correct  ideas 
upon  the  subject. 

Essential  Elements. 

2.  The  essential  elements  of  every  true  partnership  are 
(a)  A  contractbetween  the  jpartnersx  and  _ 

\jr  \         (b)  A  sharing  of  profits.^ 

Same — Contract  Between  Partners. 

3.  A  true  partnership  is  always  formed  by  virtue  of  a  con- 
tract between  all  the  partners,  and  never  by  operation  of 
law. 

A  partnership  only  exists  between  persons  who  have  con- 
tracted together  for  those  things  which  the  law  has  declared  to 
constitute  a  partnership.  In  the  absence  of  such  an  agree- 
ment, a  partnership  is  never  formed  by  operation  of  law.9 

Comm.  23,  and  quoted  in  a  preceding  note  of  this  chapter,  is  inac- 
curate. 

7  In  this  respect,  the  definition  of  a  partnership  given  in  Pars. 
Partn.  c.  2,  §  1,  as  the  combination  by  two  or  more  persons  of  capital, 
etc.,  has  been  criticised  as  inaccurate.  See  1  Lindl.  Partn.  p.  3, 
note  1. 

s  Lindl.  Partn.    (15th  ed.)   p.  1. 

b  Wilson's  Ex'rs  v.  Cobb's  Ex'rs,  28  N.  J.  Eq.  177;  Phillips  v.  Phil- 
lips, 49  111.  437;  Bushnell  v.  Consolidated  Ice  Mach.  Co.,  138  111.  67, 
27  N.  E.  596;  Metcalf  v.  Redmon,  43  111.  264;  Bishop  v.  Georgeson, 
60  111.  484;  Freeman  v.  Bloomfield,  43  Mo.  391;  Ingals  v.  Ferguson, 
59  Mo.  App.  306;   Hedge's  Appeal,  63  Pa.  273;   In  re  Gibb's  Estate, 


ESSENTIAL  ELEMENTS. 


5 


Thus,  no  partnership  exists  between  a  father  and  his  son,  who 
works  for  him  without  salary,  and  without  any  agreement  be- 
tween them.10  So,  a  husband  and  wife  are  not  partners, 
though  they  purchase  property  jointly.11  The  joint  prosecu- 
tion of  a  lawsuit  does  not  create  a  partnership  between  the 
parties  as  to  the  subject-matter  in  dispute,  in  the  absence  of 
an  agreement  to  that  effect,12  nor  does  it  create  a  partnership 
between  the  attorneys  of  a  party.123,  A  person  cannot  be 
made  a  partner  against  his  will,  by  accident,  or  the  conduct  of 
others.13 

Agreements  not  Concluded. 

Since  a  paxtiisrship  results  only  from  a  flontr.net  between 
the  parties,  i!  follows  that  there  is  no  partnership  unless  all 
the  parties  have  mutually  assented  to  the  same  terms,  for  in 
the  absence  of  such  mutual  assent,  there  is  no  contract,14 

157  Pa.  59,  70,  27  Atl.  383.  But  compare  Goddard  v.  Hodges,  1  Cromp. 
&  M.  33.  Partnerships  by  estoppel  are  no  exceptions  to  this  rule,  for,. 
as  will  be  seen,  such  are  not  real  partnerships-inter  se,  but  individ- 
uals are  merely  held  liable  to  third  persons  for  each  other's  acts  as 
though  they  were  partners.    See  infra,  §  35. 

io  Phillips  v.  Phillips,  49  111.  437. 

ii  Ingals  v.  Ferguson,  59  Mo.  App.  299,  306. 

12  Wilson's  Ex'rs  v.  Cobb's  Ex'rs,  28  N.  J.  Eq.  177.  Where  a  man 
and  women  living  with  him  as  his  wife  jointly  accumulate  property, 
after  his  death  such  woman  cannot  claim  the  property  as  surviving 
partner,  to  the  exclusion  of  the  real  wife's  claim  by  inheritance. 
Estate  of  Winters,  Myr.  Prob.   (Cal.)  131. 

12a  Willis  v.  Crawford,  38  Or.  522,  63  Pac.  985,  64  Pac.  866,  53  L. 
R.  A.  904. 

13  Freeman  v.  Bloomfield,  43  Mo.  391.  The  creditors  of  a  partner 
who  take  his  interest  by  assignment  or  on  execution  cannot  be  in- 
volved, against  their  consent,  in  the  responsibilities  of  a  partner- 
ship. They  are  entitled  to  take  it  without  the  risk  and  burden  of 
being  partners.  Marquand  v.  New  York  Mfg.  Co.,  17  Johns.  (N.  Y.) 
525. 

1*  "In  negotiations  for  a  partnership,  the  parties  deal  as  strangers, 
for  there  is  no  confidential  relation  existing  between  them  until  the 


6  WHAT  CONSTITUTES  A  PARTNERSHIP. 

4.  Delectus  Personarum. — The  contract  creatinj 

nership  must  have  been  entered  into  by  all  the  part- 
ners. 

5.  No  person  can  be  introduced  as  a  partner  without  the 
consent  of  all  those  who,  for  the  time  being,  are  mem- 
bers of  the  firm,  except  in  the  case  of —  r 

Exceptions —  /       *  n       7P"\fl     A_       -Vvi^t^Z 

(a)  Mining  partnerships,  and  J    7  **——    ' 

(b)  Joint-stock  companies^.      C^yu^>-n^X —  ^   ^ 

It  is  a  well-established  principle  that  a  partnership  can 

exist  only  by  the  voluntary  contract  of  all  the  persons  who  are 
partners.15  One  partner  cannot,  without  the  consent  of  the 
other  partners,  introduce  a  third  person  as  partner  into  the 

partnership  is  actually  formed."  Uhler  v.  Semple,  20  N.  J.  Eq.  288. 
See,  also,  Metcalf  v.  Redmon,  43  111.  264.  Persons  who  have  agreed 
to  become  partners,  and  have  acted  as  such,  will  be  held  to  be  part- 
ners inter  se,  though  they  may  not  have  understood  the  conditions 
of  the  agreement  alike.    Cook  v.  Carpenter,  34  Vt.  121. 

is  Channel  v.  Fassitt,  16  Ohio,  166;  Burnett  v.  Snyder,  76  N.  Y. 
344;  Elderkin  v.  Winne,  1  Chand.  (Wis.)  27;  Kingman  v.  Spurr,  7 
Pick.  (Mass.)  235;  Central  City  Bank  v.  Walker,  66  N.  Y.  431;  Hay- 
ward  v.  Barron  (Com.  PI.),  19  N.  Y.  Supp.  384.  See,  also,  post,  §§  6, 
7,  "Sub-Partnerships."  "To  form  a  partnership,  as  least  so  far  as 
the  parties  themselves  are  concerned,  the  assent  of  both  the  con- 
tracting parties  is  required."  Bennett  v.  Pulliam,  3  111.  App.  185, 
190,  holding  that  an  unaccepted  proposition  of  one  party  is  insuffi- 
cient. Where,  by  an  article  of  agreement,  two  persons  agree  to  carry 
on  a  trade  or  business  of  a  particular  nature,  and  in  the  same  in- 
strument a  third  party  joins  with  one  of  the  other  parties  to  carry 
on  another  trade  or  business  for  their  separate  account,  the  relation 
of  partners  is  not  created  between  the  three,  so  as  to  enable  a  per- 
son dealing  with  either  branch  of  the  concern  to  maintain  an  ac- 
tion against  the  whole.  Elderkin  v.  Winne,  1  Chand.  (Wis.)  27. 
Where  stock  in  a  joint-stock  company  is  subscribed  and  paid  for  by 
one  person  in  the  name  of  another,  who  does  not  know  of  or  consent 
to  it,  and  has  not  ratified  it,  the  latter  is  not  liable,  but  the  former 
is.    Wehrman  v.  McFarlan,  9  Ohio  Dec.  400. 


ESSENTIAL  ELEMENTS.  7 

concern.10     The  consent  to  receive  a  new  member  as  a  part- 
ner must  be  unanimous.     A  majority  of  the  partners  can  not 

ii  i  - 

introduce  a  new  member,  against  the  will  of  any  partner.17 

The  relations  existing  between  partners  are  of  such  an  inti- 
mate and  confidential  nature,  and  mutual  trust  and  confidence 
is  so  essential  to  the  successful  prosecution  of  the  partnership 
business,  that  no  one  can  be  made  the  partner  of  another 
without  or  against  his  consent.ls  This_jDriucipleJ.s__called^ 
"delectus  persona  rum ."  and  is  said  to  be  one  of  the  funda- 
mental principles  of  partnership  law.     The  important  conse- 

16 Murray  v.  Bogert,  14  Johns.  (N.  Y.)  318.  Every  member  must 
assent  to  be  a  partner  of  all  the  others.  Gray  v.  Gibson,  6 ''Mien.  sOO. 
Two  of 'five  members  or^TopaTtnersKTp,  in  their  individual  capacity, 
entered  into  an  agreement  with  defendant  C.  B.  S.,  in  which  it  was 
stated  that  it  was  for  the  interest  of  said  firm  that  C.  B.  S.  should 
have  an  interest,  and  become  a  copartner;  therefore  it  was  agreed 
that  he  "is  a  copartner  in  the  firm,"  and  that  he  shall  be  entitled  to 
receive  from  the  other  parties  to  the  agreement  one-third  of  the 
profits  earned  and  received  by  each;  he  agreeing  to  pay  one-third 
of  any  losses  sustained  by  either  "by  reason  of  their  connection  as 
copartners,  or  otherwise,  with  the  firm."  In  an  action  by  a  creditor 
of  the  firm,  in  which  it  was  sought  to  charge  C.  B.  S.  as  a  partner, 
it  was  held  that  the  agreement  did  not  constitute  him  a  partner,  as 
all  the  partners  had  not  joined  or  concurred  therein.  Burnett  v. 
Snyder,  76  N.  Y.  344.  One  partner  cannot,  without  the  consent  of 
the  other,  introduce  a  stranger  into  the  firm,  nor  can  he,  without 
such  consent,  make  the  other  partner  a  member  of  another  firm; 
but  such  consent  may  be  implied  from  the  acquiescence  and  acts  of 
the  parties;  and  if  such  other  partner  is  made  acquainted  with  the 
facts,  he  ought  to  dissent  from  the  arrangement;  otherwise  he  will 
te  bound  by  it.  Mason  v.  Connell,  1  Whart.  (Pa.)  381.  One  mem- 
ber of  a  partnership  cannot  make  such  a  contract  as  will  involve  the 
creation  of  another  partnership  between  his  owrn  firm  and  other 
parties,  so  as  to  bind  thereby  his  copartners,  unless  he  has  other  au- 
thority than  that  which  is  incident  to  the  mere  relation  of  partners. 
Buckingham  v.  Hanna,  2<Hnd.  110.  See,  to  the  same  effect,  Love  v. 
Payne,  73  Ind.  80,  and  Tabb  v.  Gist,  1  Brock.  33,  Fed.  Cas.  No.  13,719. 

n  Meaher  v.  Cox,  37  Ala.  201. 

lsAs  to  partnerships  as  to  third  persons  by  estoppel  or  holding 
out,  see  post,  §§  35-37. 


S  WHAT  CONSTITUTES  A  PARTNERSHIP. 

quence  of  this  principle  is  that  the  transfer  by  one  partner  of 
his  interest  in  the  firm  does  not  constitute  his  transferee  a 
partner  with  the  remaining  members  unless  they  consent 
thereto.1''' 

A.S  will  he  seen  hereafter,  any  change  in  the  membership  of. 
the  firm  will  ordinarily  operate  as  a  dissolution ;  20  and  even 
where  the  remaining  partners  consent  to  the  introduction  of 
a  new  member,  the  old  firm  will  ordinarily  be  considered  as 
dissolved,  and  a  new  one  instituted  from  the  date  of  such 
t  hange  in  the  membership.21  Of  course,  consent  to  the  trans- 
fer of  a  partner's  interest,  and  the  reception  of  the  transferee 
into  the  firm,  may  be  given  in  advance,22  and  it  is  not  unusual 
to  insert  such  a  stipulation  once  for  all  in  the  original  partner- 
ship articles,  at  least  so  far  as  the  personal  representatives  of 
a  deceased  partner  are  concerned.23     A  subsequent  ratifica- 

10  Merrick  v.  Brainard,  38  Barb.  (N.  Y).  574;  McGlensey  v.  Cox, 
1  Phila.  (Pa.)  387;  Mason  v.  Connell.  1  Whart.  (Pa.)  3S1;  Meaner 
v.  Cox,  37  Ala.  201;  Jones  v.  Scott,  2  Ala.  58,  65;  Love  v.  Payne,  73 
Ind.  80,  38  Am.  Rep.  Ill;  Taylor  v.  Penny,  5  La.  Ann.  7;  Jones  v. 
O'Farrel,  1  Nev.  354;  Fay  v.  Waldron  (Sup.),  3  N.  Y.  Supp.  894; 
McCall.v.  Moss,  112  111.  493;  Cochran  v.  Perry,  8  Watts  &  S.  (Pa.) 
262;  Horton's  Appeal,  13  Pa.  67.  Where  a  partnership,  for  the  pur- 
pose of  running  stage  coaches,  issued  to  its  members  certificates  of 
their  shares  in  the  joint  stock,  containing  a  provision  that  the  shares 
should  not  be  transferred  without  the  consent  of  the  directors  and 
treasurer,  and  the  plaintiff,  to  whom  a  share  had  been  assigned, 
without  such  consent,  brought  a  bill  in  equity  to  compel  the  com- 
pany to  account,  alleging  himself  to  be  a  partner,  it  was  held  that 
he  was  not  a  partner,  and  that  the  bill  could  not  be  sustained.  King- 
man v.  Spurr,  7  Pick.   (Mass.)   235. 

20  See  post,  §  143.    See,  also,  cases  cited  in  preceding  note. 

2i  See  post,  §  143.  As  a  consequence  of  the  rule  in  the  text,  an 
incoming  partner  is  not  liable  for  the  debts  of  the  firm  incurred  be- 
fore he  was  admitted,  unless  he  expressly  assumes  them.  Christy 
v.  Sill,  131  Pa.  492,  19  Atl.  295,  297.     See,  also,  post,  §  117. 

22  Fox  v.  Clifton,  9  Bing.  119;  Mayhew's  Case,  5  De  Gex,  M.  &  G. 
837. 

23Alvord  v.  Smith,  5  Pick.  (Mass.)  232;  Lindl.  Partn.  p.  433.    The 


ESSENTIAL  ELEMENTS.  9 

tion  is  equivalent  to  a  nri^r  rvmspnt.24  Consent  may  be  im- 
plied from  a  continued  recognition  of  tlie  new  member  as  a 
partner  without  objection.25 

right  to  introduce  a  stranger  into  the  firm  will  not  be  implied  from 
a  stipulation  in  the  partnership  articles,  reserving  to  the  copartners 
the  first'  option  to  purchase  a  partner's  share  in  case  he  desires  to 
sell.    McGlensey  v.  Cox,  1  Phila.   (Pa.)   387. 

Where  articles  of  partnership  contain  power  for  one  partner  to 
nominate  and  introduce  into  the  firm  a  person  for  the  whole  or  any 
part  of  his  share  in  the  business  and  the  profits  thereof,  that  is  a 
consent  by  the  other  partners  to  admit  into  the  partnership  any  per- 
son who  is  willing  to  be  introduced  into  the  firm  and  to  observe  the 
conditions  of  his  admission;  and  the  nominee,  on  accepting  his 
nomination,  becomes  in  the  eye  of  the  courts  a  partner,  and  entitled 
as  against  the  other  partners  to  such  relief  as  courts  of  equity  are 
in  the  habit  of  granting  to  persons  who  stand  in  the  relationship  of 
partners  to  others.     Byrne  v.  Reid   (1902),  71  L.  J.  Ch.  Div.  830. 

"  But  it  is  unlikely  that  such  a  result  would  be  reached  in  the 
United  States.  The  English  doctrine  of  continuing  partnerships  is 
here  generally  repudiated.  Burdick,  Partn.  330.  In  the  words  of  one 
of  our  courts:  'There  can  be  no  such  thing  as  indissoluble  partner- 
ship. Every  partner  has  an  indefeasible  right  to  dissolve  the  part- 
nership. .  .  .  Even  where  the  partners  covenant  with  each  other 
that  the  partnership  shall  continue  seven  years,  either  partner  may 
dissolve  it  the  next  day;  the  only  consequence  being  that  he  thereby 
subjects  himself  to  a  claim  for  damages  for  breach  of  his  covenant.' 
Skinner  v.  Dayton  (1822),  19  Johns.  513,  at  p.  538,  approved  and  ap- 
plied. Solomen  v.  Kirkwood  (1884),  55  Mich.  256."  3  Columbia 
L.  R.  109. 

24  Mason  v.  Connell,  1  Whart.  (Pa.)  381;  Meaher  v.  Cox,  37  Ala. 
201;   Buckingham  v.  Hanna,  20  Ind.  110;  Love  v.  Payne,  73  Ind.  80. 

25  Meaher  v.  Cox,  37  Ala.  201;  Mason  v.  Connell,  1  Whart.  (Pa.) 
381;  Wood  v.  Connell,  2  Whart  (Pa.)  542;  Rosenstiel  v.  Gray,  112 
111.  282;  Tabb  v.  Gist,  1  Brock.  33,  Fed.  Cas.  No.  13,719.  But  one 
need  not  notify  the  world  that  he  does  not  assent  to  being  a  partner 
with  the  transferee,  in  order  to  escape  liability  for  the  latter's  acts. 
Jones  v.  O'Farrel,  1  Nev.  354.  New  members  cannot  be  introduced 
into  an  existing  partnership,  even  by  a  majority  of  the  partners, 
without  the  consent  of  the  others;  yet,  if  the  others  recognize  and 
treat  the  new  members  as  partners,  and  continue  the  business  with 
them  under  the  original  articles  this  is  sufficient  to  make  them  part- 
ners, and  to  render  the  original  articles  operative  as  between  them. 
Meaher  v.  Cox,  37  Ala.  201. 


10  WHAT  CONSTITUTES  A  PARTNERSHIP. 

Exceptions  I"  Rule — Mining  Partnerships. 

In  "mining  partnerships,"  so  called,  there  is  no  delectus 
personarum,  bul  tl>e  share  of  any  partner  may  be  freely  trans- 
ferred by  death  or  assignment,  without,  the  consent  of  the  co- 
partners,  and  without  working  a  dissolution.26  For  this  rear. 
son  mining  partnerships  have  beer  said  no1  to  be  true  partner- 
ships^ hut  rather  a  cm—  between  tenancies  in  common  and, 
partnerships  proper.28  A  "mining  partnership,"  in  this  sense 
of  the  term,  exists  between  the  tenants  in  common  of  a  mine, 
who  work  it  together  and  divide  the  profits  in  proportion  to 
their  several  interests.29  Of  course,  if  the  parties  so  intend, 
they  may  form  an  ordinary  partnership  for  the  purpose  of 
carrying  on  mining-  by  entering  into  an  appropriate  contract 
to  that  effect.  In  such  a  case,  there  will,  of  course,  be  a  de- 
lectus  personarum.  But  such  a  partnership  must  be  created 
by  a  special  agreement,  and  will  not  result  merely  from  they 

aeKalin  v.  Smelting  Co.,  102  U.  S.  641;  Bissell  v.  Foss,  114  U.  S. 
252;  Kimberly  v.  Arms,  129  U.  S.  512,  530;  Taylor  v.  Castle,  42  Cal. 
267;  Nisbet  v.  Nash,  52  Cal.  540;  Jones  v.  Clark,  42  Cal.  180;  Higgins 
v.  Armstrong,  9  Colo.  38,  10  Pac.  232;  Skillman  v.  Lachman,  23  CaL 
203;  Duryea  v.  Burt,  28  Cal.  569;  McConnell  v.  Denver,  35  Cal.  365; 
Childers  v.  Neely,  47  W.  Va.  70,  34  S.  E.  828,  81  Am.  St.  Rep.  777. 

27  Duryea  v.  Burt,  28  Cal.  569;  Kahn  v.  Smelting  Co.,  102  U.  S.  641. 

2s  Bates,  Partn.  §  14.  Unincorporated  ditch  companies,  organized 
for  the  sale  of  water  to  miners  and  others,  the  stock  in  which  is 
bought  and  sold  at  the  pleasure  of  the  owners,  without  consulting 
the  co-owners,  differ  from  ordinary  commercial  partnerships.  Some 
of  the  incidents  of  a  partnership  pertain  to  such  companies,  and 
some  of  mere  tenancies  in  common  likewise  pertain  to  them.  Mc- 
Connell v.  Denver,  35  Cal.  365. 

29  Nolan  v.  Lovelock,  1  Mont.  224;  Bybee  v.  Hawkett,  12  Fed.  649; 
Skillman  v.  Lachman,  23  Cal.  198;  Judge  v.  Braswell,  13  Bush  (Ky.), 
67,  26  Am.  Rep.  185;  Babcock  v.  Stewart,  58  Pa.  179;  Burgan  v. 
Lyell,  2  Mich.  102,  Burdick's  Cases,  312;  Snyder  v.  Burnham,  77  Mo. 
52;  Higgins  v.  Armstrong,  9  Colo.  38.  That  parties  are  tenants  in 
common  is  insufficient.  Hartney  v.  Gosling,  10  Wyo.  346,  68  Pac. 
1118,  98  A.  S.  R.  1005. 


ESSENTIAL  ELEMENTS.  11 

common  ownership  and  operation  of  a  mine,30  though  the 
agreement  need  not  he  express  but  may  he  implied  from  the 
acts  of  the  parties.303- 

Sam  e — Jo  int-Stoch  Com  pan  ies. 

Joint-stock  companies  fire,  a  species  of  partnership  in  which 
the  capital  stock  is  divided  into  transferable^shares,  much  in 
the  nature  of  shares  in  a  corporation.  There  is,  of  course,  no 
delectus  personarum  in  such  an  association.31 

6.  Subpartnerships.— A   subpartnership   exists  wherp  nnp 

partner  in  an  existing  firm  agrees  to  share  his  propor-        $ 
tion  of  the  profits  with  a  third  person  in  suqft  a  manner  f 

as  to  constitute  himself  and  such  third  person  partners. 

7.  Such  a  contract  does  not  violate  the  principle  of  delectus 

personarum,  for  it  does  not  make  such  third  person  a 
partner  with  the  other  partners  in  the  original  firm. 

A  jmjjpartnership,  is,  as  it  were,  a  partnership  within  a 
partnership :  It  presupposes  the  existence  of  a  partnership, 
to  which  it  is  itself  subordinate.  An  agTeement  to  share  pro- . 
fits  as  common  owners,  constitutes  a  partnership  only  between 
the  parties  to  the  agTeement.  If,  therefore,  several  persons 
are  partners,  that  one  of  them  agrees  to  share  the  profits 

-"Bradley  v.  Harkness,  26  Cal.  76;  Stapleton  v.  King,  33  Iowa,  28, 
Decker  v.  Howell,  42  Cal.  636;  Duryea  v.  Burt,  28  Cal.  569,  587;  Craw- 
shay  v.  Maule,  1  Swanst.  518;  Lawrence  v.  Robinson,  4  Colo.  567. 
See,  also,  Kimberly  v.  Arms,  129  U.  S.  512. 

There  must  be  an  agreement  to  work  the  mine  for  the  joint  profit 
of  the  parties.     Doyle  v.  Burns,  123  Iowa,  488,  99  N.  W.  195. 

Cotenants  by  coworking  become  mini-ng  partners  without  special 
contract.  Childers  v.  Neely,  47  W.  Va.  70,  34  S.  E.  828,  81  A.  S.  R. 
777. 

soa  Hartney  v.  Gosling,  10  Wyo.  346,  68  Pac.  1118,  98  A.  S.  R.  1005. 

a1  See  post,  c.  12,  "Joint-Stock  Companies."  See,  also,  Hedge's 
Appeal,  63  Pa.  273. 


12  WHAT  CONSTITUTES  A  PARTNERSHIP. 

with  a  stranger  as  common  owners,  does  not  make  the 
stranger  a  partner  in  the  original  linn."'2  The  principle  cf 
delectus  personarurrij  already  explained,  forbids  this.  The 
resull  of  such  an  agreement  is  to  constitute  what  is  called  a 
"subpartnership," — thai  is  to  say,  it  makes  the  parties  to  it 
partners  inter  se;  but  it  in  no  way  affects  the  other  members 
of  the  original  firm.88  Even  knowledge  and  approval  of  the 
subpartnership  upon  the  part  of  the  other  members  of  the 
principal  firm  will  not  make  the  subpartner  a  partner  in  such 
firm  upon  the  principle  of  consent  or  ratification." l 

A  subpartner  is  not  liable  for  the  debts  of  the  principal 
firm.35     Bulwhere. .thc^o--calle(La^nl '] »a rtner"  owns  the  entire 
interest,  including  profits  andpropertyT  be  must  be.  eonsirlereiL 
as  the  real  partner,  standing  in  the  place  of  the  ostensible  one, 
and  assuming  his  obligations  and  Liabilities.36 

32  Ex  parte  Barrow,  2  Rose,  252;  Meyer  v.  Krohn,  114  111.  574,  2 
N.  E.  495;  Reynolds  v.  Hicks,  19  Ind.  113;  Burnett  v.  Snyder,  81 
N.  Y.  550,  Mechem's  Cases,  125;  Setzer  v.  Beale,  19  W,  Va.  274; 
Reilly  v.  Reilly,  14  Mo.  App.  62;  Bybee  v.  Hawkett,  12  Fed.  649; 
Nirdlinger  v.  Bernheimer,  133  N.  Y.  45,  30  N.  E.  561. 

ss  Lindl.  Partn.  p.  48. 

34  Burnett  v.  Snyder,  81  N.  Y.  550,  Mechem's  Cases,  125;  Channel 
v.  Fassitt,  16  Ohio,  166;  Newland  v.  Tate,  3  Ired.  Eq.  (N.  C.)  226. 

35  Burnett  v.  Snyder,  81  N.  Y.  550,  Mechem's  Cases,  125;  Newland 
v.  Tate,  3  Ired.  Eq.  (N.  C.)  226;  Meyer  v.  Krohn,  114  111.  574,  2  N.  E. 
495;  Bybee  v.  Hawkett,  12  Fed.  649;  Reynolds  v.  Hicks,  19  Ind.  113. 
Under  the  doctrine  which  formerly  almost  universally  prevailed — 
tnat  any  sharing  in  the  profits  rendered  one  liable  as  a  partner — a 
subpartner  was  held  liable  for  the  debts  of  the  principal  firm.  Fitch 
v.  Harrington,  13  Gray  (Mass.)  468;  Bering  v.  Crafts,  9  Mete. 
(Mass.)  380.  But,  as  will  be  seen  hereafter,  this  doctrine  was 
thoroughly  exploded  by  the  great  case  of  Cox  v.  Hickman,  8  H.  L. 
Cas.  268,  Burdick's  Cases,  65,  Mechem's  Cases,  70,  and  now  it  is  al- 
most universally  conceded  that  a  mere  sharing  in  the  profits  will  not 
render  one  liable  as  a  partner. 

so  Webb  v.  Johnson,  95  Mich.  325,  54  N.  W.  947.  See,  also,  God- 
<lard  v.  Hodges,  1  Cromp.  &  M.  33. 


ESSENTIAL  ELEMENTS.  1& 

Same — Sharing  Profits. 

8.  Whether  or  not  a  sharing  of  the  profits  of  a  business  cre- 
ates a  partnership  is  best  considered  with  reference 
to — 

(a)  The  former  doctrine,  and 

(b)  The  modern  doctrine. 


9.  Former  Doctrine. — Formerly  all  persons  sharing  the 
profits  of  a  business  were  held  liable  as  partners  to 
third  persons  for  the  business  debts  of  each  other,  irre- 
spective of  whether  they  were  really  partners,  as  be- 
tween themselves  or  not. 


Until  the  decision  of  the  celebrated  case  of  Cox 


man,  in  1860^  the  law  was  universally  regarde^asL-settled. 
that  any  sharing  in  the  profits  of  a  business  constituted  a  part- 
iiershirjj  or  at  least  subjected  the  parties  so  sharing  to  a  part- 
ner's liability,  so  far  as  third  persons  were  concerned,37  and 
all  traces  of  this  doctrine  have  not  yet  disappeared.38     While 

37  Grace  v.  Smith,  2  W.  Bl.  998,  Burdick's  Cases,  45,  Mechem's 
Cases,  61;  Waugh  v.  Carver,  2  H.  Bl.  235,  2  Smith,  Lead.  Cas.  (9th 
ed.)  1178,  Burdick's  Cases,  47,  Mechem's  Cases,  67;  Cheap  v.  Cra- 
mond,  4  Barn.  &  Aid.  663;  Ex  parte  Hamper,  17  Ves.  412;  Heyhoe  v. 
Burge,  9  C.  B.  431;  Purviance  v.  McClintee,  6  Serg.  &  R.   (Pa.)   259. 

aswessels  v.  Weiss,  166  Pa.  490,  31  Atl.  247;  Edwards  v.  Tracy, 
62  Pa.  374;  Lord  v.  Proctor,  7  Phila.  (Pa.)  630;  Merrall  v.  Dobbins, 
169  Pa.  480,  32  Atl.  578,  Burdick's  Cases,  86;  Leggett  v.  Hyde,  58 
N.  Y.  272;  Burdick's  Cases,  50;  Hackett  v.  Stanley,  115  N.  Y.  625, 
22  N.  E  745,  Burdick's  Cases,  57;  Burnett  v  Snyder,  81  N.  Y.  550, 
Mechem's  Cases,  125. 

In  Georgia  sharing  in  the  profits,  as  profits,  renders  the  parties 
to  the  transaction  partners  as  to  third  parties.  Brandon  &  Dreyer 
v.  Connor,  117  Ga.  759,  63  L.  R.  A.  260.  The  court  refers  to  the  rule 
laid  down  in  the  first  edition  of  this  work  (post,  §§  10,  34),  and 
states  that  the  trend  of  modern  authorities  is  to  support  such  rule, 
but  it  feels  bound  to  follow  the  rule  laid  down  in  Buckner  v.  Lee, 
8  Ga.  285,  and  followed  in  numerous  cases,  so  long  as  such  cases 
stand  unreviewed  and  unreversed. 


14  WHAT  CONSTITUTES  A  PARTNERSHIP. 

this  view  of  the  nature  of  a  partnership  prevailed,  it  was  held 
thai  one  who  received  a  share  in  the  profits  as  compensation 
in  lieu  of  salary  for  services  rendered,89  or  rent  of  property 
used  in  the  business,40  or  interest  on,  or  in  payment  of  money 
loaned,41  was  liable  as  a  partner  to  third  persons  for  the  debts 
of  the  firm,  irrespective  of  the  actual  intenl  of  the  parties, 
and  it  was  immaterial  whether  they  were  partners  inter  se  or- 
no!.1-     The  only  reason  ever  assigned  for  this  arbitrary  rule 

-'Cheap  v.  Cramonrl,  4  Barn.  &  Aid.  663;  Ex  parte  Rowlandson,  1 
Rose,  92;  Ex  parte  Digby,  1  Deac.  341;  Rowland  v.  Long,  45  Md.  439; 
Taylor  v.  Terme,  3  Har.  &  J.  (Md.)  505;  Strader  v.  White,  2  Neb. 
348;  Miller  v.  Hughes,  1  A.  K.  Marsh.  (Ky.)  181;  Lomme  v.  Kintzing, 
1  Mont.  290;  Hackett  v.  Stanley,  115  N.  Y.  625,  22  N.  E.  745,  Burdick's 
Cases,  57. 

to  I >alton  City  Co.  v.  Dalton  Mfg.  Co.,  33  Ga.  243;  Dalton  City  Co. 
v.  Hawes,  37  Ga.  115.  And  see  Adams  v.  Carter,  53  Ga.  160;  Buck- 
ner  v.  Lee,  8  Ga.  285.  "It  avails  nothing  that  they  specify  that  they 
shall  receive  one-half  the  net  profits  'as  rent.'  It  is  apparent  that 
what  they  are  to  receive  will  be  more  or  less,  or  nothing  at  all,  as 
the  'accidents  of  trade'  may  determine.  This  being  ascertained,  the 
conclusion  of  law  is  that  whatever  they  may  receive  will  be  re- 
ceived 'as  profits,'  not  as  rent.  It  matters  not  that  the  parties 
christen  the  contract  'lease,'  and  its  fruit  'rent.'  The  law  looks 
through  the  whole  agreement,  and  finding  that  the  Dalton  City  Com- 
pany are  to  receive  no  fruit,  unless  there  be  net  profits,  and  only  a 
stipulated  proportion  of  them,  sees  therein  evidence  of  a  community 
of  losses  and  profits,  and  demoninates  it  a  partnership."  Dalton  City 
Co.  v.  Dalton  Mfg.  Co.,  33  Ga.  255. 

«  Grace  v.  Smith,  2  W.  Bl.  998,  Burdick's  Cases,  45,  Mechem's 
Cases,  61;  Bloxham  v.  Pell,  cited  in  2  W.  Bl.  999;  Leggett  v.  Hyde, 
N.  Y.  272,  Burdick's  Cases,  50;  Manhattan  Brass  &  Mfg.  Co.  v.  Sears, 
45  N.  Y.  797;  Cushman  v.  Bailey,  1  Hill  (N.  Y.)  526;  Parker  v.  Can- 
field,  37  Conn.  250,  9  Am.  Rep.  317;  Rosenfield  v.  Haight,  53  Wis. 
260,   10  N.  W.  378,  40  Am.  Rep.  770. 

42  in  Waugh  v.  Carver,  2  H.  Bl.  235,  2  Smith,  Lead.  Cas.  (9th  ed.) 
1178,  Burdick's  Cases,  47,  Mechem's  Cases,  67,  it  was  admitted  by 
the  court  that  the  agreement  in  question  did  not  constitute  the  par- 
ties actual  partners,  but  they  were  both  held  liable,  nevertheless, 
for  the  debt  of  one  of  them. 

For  cases  recognizing  the  distinction  between  partnership  inter  se 
and  partnership  as  to  third  persons,  see  the  following  cases:    Price 


ESSENTIAL  ELEMENTS.  15 


of  that  fymd  upon  which  the  creditor  of  the  trader  relic-  for 
repayment.'1  r'  Imt,  as  has  been  pointed  out,  this  places  the 
question  of  partnership  or  no  partnership  upon  a  false  footing, 
for  creditors  do  not  look  to.  the  profits  for  security  for  their, 
debts  at  all,  and,  indeed,. the  existence  of  profits  is.  inconsistent 
with  the  existfwp-  of  dfbt.fi.44 

The  strictness  of  the  old  rule  as  to  profit  sharing  gave  rise 
to  subtile  distinctions  between  a  payment  out  ofthe  profits 
and  a  payment  varying  w ith_them ;  the  former  bcipfi',  hejd  to 
create  a  partnership,  but  ttie  latter  not.45     This  distinction 

v.  Alexander,  2  G.  Greene  (Iowa),  427,  52  Am.  Dec.  526;  Bromley  v. 
Elliot,  38  N.  H.  287;  Pitkin  v.  Pitkin,  7  Conn.  311;  Stanckfield  v. 
Palmer,  4  G.  Greene  (Iowa),  23;  Gill  v.  Kuhn,  6  Serg.  &  R.  (Pa.) 
333;  Kellogg  v.  Griswold,  12  Vt.  291;  Brandon  v.  Conner,  117  Ga. 
759,  45  S.  E.  371. 

43  Grace  v.  Smith,  2  W.  Bl.  998,  Burdick's  Cases,  45,  Mechem's 
Cases,  61;  Parker  v.  Canfield,  37  Conn.  250,  9  Am.  Rep.  320. 

a  Lindl.  Partn.  26.  "Persons  held  liable  as  partners  to  third  per- 
sons did  not  take  part  of  the  funds  upon  which  creditors  relied,  any 
more  than  did  a  salaried  agent,  and,  in  fact,  less  so;  for,  when  a 
partnership  was  unable  to  pay  its  debts,  it  was  because  there  were 
no  profits,  and,  in  that  case,  such  person  took  nothing,  whereas,  if 
his  compensation  had  been  definite,  the  fund  would  have  been  di- 
minished." Bates,  Partn.  §  15.  See,  also,  Eastman  v.  Clark,  53  N. 
H.  276. 

"The  ground  of  the  doctrine  was  that  a  person  who  shares  the 
profits  ought  to  share  the  losses,  because  he  takes  a  part  of  the  fund 
out  of  which  the  losses  are  to  be  paid.  But  the  ground  will  not  bear 
examination;  for,  in  point  of  fact,  the  lossess  are  no  more  payable 
out  of  the  profits  than  out  of  the  capital,  and  in  other  cases  it  has 
been  decided,  quite  inconsistently  with  this  ground,  that  it  is  only 
a  participation  in  the  net,  not  the  gross,  profits,  which  makes  the 
participant  a  quasi-partner.  Other  grounds,  but  none  more  satis- 
factory, have  been  suggested.  Indeed,  the  doctrine,  though  well  re- 
ceived by  some  judges,  appears  to  have  been  always  regarded  by 
others  as  an  anomaly  or  legal  solecism."  Boston  &  Colorado  Smelt- 
ing Co.  v.  Smith,  13  R.  I.  31. 

^■•Ex  parte  Hamper,  17  Ves.  403;   Grace  v.  Smith,  2  W.  Bl  * 

Burdick's  Cases,  45.  .Mechem's  Cases.  61.     Although  a  right  to  share 


16  WHAT  CONSTITUTES  A  PARTNERSHIP. 

was  not  universally  recognized.46  These  subtile  distinctions: 
have  been  almost  universally  swept  away,  and  the  whole  law 
of  partnership  Liability  1ms  been  placed  upon  a  sound  basis  of 
principle  by  modern  decisions. 


10.  Modern  Doctrine. — Under  the  modern  doctrine  of  part- 
nership, persons  are  not  liable  to  third  persons  as  part- 
ner's," although  they  share  profits,  unless — 

(a)  They  are  really  partners  inter  se,  or 

(b)  Have  held  themselves  out  as  partners  under  such  cir-. 
cumstances  as  to  estop  them  from  denying  it. 

The  modem  doctrine  of  partnership  dates  from  the  decision 
in  1860,  by  the  English  house  of  lords,  of  the  leading  case  of 
Cox  v.  Hickman.47  In  this  case,  it  was  decided  that  persons 
who  share  the  profits  of  a  business  do  not  incur  the  liabilities 
of  partners,  unless  that  business  is  carried  on  by  themselves 
personally,  or  by  others  as  their  real  or  ostensible  agents.48 

in  the  profits  may  constitute  one  a  partner,  a  commission  equal  to 
such  share  as  compensation  does  not.  Edwards  v.  Tracy,  62  Pa.  374. 
In  Buckner  v.  Lee,  8  Ga.  285,  Judge  Nisbet  says:  "It  is  clear,  then, 
that  if  one  is  to  receive  a  certain  proportion  of  profits,  as  one-third, 
or  one-half,  as  profits,  he  is  a  partner.  If  a  certain  sum  is  to  be  paid 
out  of  the  profits,  and  the  party  does  not  look  to  that  fund  alone  for 
payment,  he  is  not  a  partner;  but  if  the  sum  to  be  paid  is  not  fixed, 
but  may  be  increased  or  diminished  by  the  amount  or  accidents  of 
the  business,  then  the  receiver  is  a  partner."  Quoted  and  followed 
in  Dalton  City  Co.  v.  Dalton  Mfg.  Co.,  33  Ga.  254. 

•to  in  Dalton  City  Co.  v.  Hawes,  37  Ga.  115,  an  agreement  to  pay, 
as  rent,  "a  sum  equal  to  one-half  of  the  net  profits,"  was  held  to 
create  a  partnership.  See,  also,  Parker  v.  Canfield,  37  Conn.  250, 
9  Am.  Rep.  320,  wherein  the  court  said:  "The  mere  use  of  the  ex- 
pression, 'a  sum  equal  to  the  profits,'  in  lieu  of  the  word  'profits,' 
does  not  change  the  nature  of  the  contract." 

4"  8  H.  L.  Cas.  268.     See,  also,  for  reports  of  the  same  case  below, 
3  C.  B.   (N.  S.)   523,  and  18  C.  B.  617. 
■43  Beckham  v.  Drake,  9  Mees.  &  W.  79;  Ernest  v.  Nicholls,  6  H.  L. 


ESSENTIAL  ELEMENTS.  17 

This  case  has  ever  since  been  almost  universally  followed  and 
approved.49  It  was  at  once  the  end  of  the  old  theory  of  part- 
nership, and  the  starting  point  of  a  new  doctrine.  It  put  art 
end  to  two  notions  which  had  theretofore  been  regarded  as 
fundamental :  "First,  that  third  persons,  rnq,y  hold  to  the  lia- 
bility of  partners  those  who,  in  fack  are  not  partners,  merely 
because  sume  other  relation  exists  between  them  ;  and,  second, 
that  participation  in  the  profits  of  a  business  isconclusiye-0-L> 
a  partnership.""'"  It  placed  partnership  liability  upon  one  or 
the  other  of  three  well-recognized  grounds  of  liability  at  com- 
mon law,  viz.,  personal  commission,  agency,  estoppel,  and 
tot  ally  abandoned  the  rule*,  for  which  no  sound  principle  had 
ever  been  given,  that  mere  profit  sharing  created  a  liability  to 
third  persons.  Nevertheless,  the  courts  of  a  few  states  have 
distinctly  refused  to  follow  the  rule  established  by  Cox  v. 
Hickman,  and  still  cling  to  the  old  rule  that  a  sharing  of 
profits  renders  one  liable  as  a  partner  to  third  persons,  al- 
though there  is,  in  fact,  no  partnership  inter  se;51  and,  in 
many  recent  cases,  expressions  may  be  found  to  the  effect  that 
a  partnership  may  exist  as  to  third  persons  where  there  is  none 
inter  se.  mmmm 


Cas.  400;  Wilson  v.  Whitehead,  10  Mees.  &  W.  503;  Eastman  v. 
Clark,  53  N.  H.  276. 

40  See  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  419;  Pooley  v. 
Driver,  5  Ch.  Div.  450;  Home  v.  Hammond,  L.  R.  7  Exch.  218.  For 
American  cases,  see  infra,  §§  12-15. 

oo  Pars.  Partn.  §  43;  Eastman  v.  Clark,  53  N.  H.  276.  "Since_tM& 
decision,  participaliQ.&_jn  profits  has  ceased  to  be  a  conclusive  test 
fit  her  of  partnership,  or  of  liability  as  a~pkrtlinr.u — 9-fincTXaws 
Eng.  p.  455.  tit.  "Partnership." 

bi  In  New  York  there  is  considerable  confusion  in  the  decisions 
as  to  what  is  the  true  test  of  partnership.  It  has  been  several  times 
held  that  Cox  v.  Hickman  has  never  been  acknowledged  in  New 
York,  and  that  Grace  v.  Smith  and  Waugh  v.  Carver  are  still  the 
recognized  authorities.  But,  nevertheless,  the  substantial  results  of 
Cox  v.  Hickman  are  apparent  in  many  cases.  Leggett  v.  Hyde,  58 
2 


IS  WHAT  CONSTITUTES  A  PARTNERSHIP. 


Tests  of  Partnership. 


II.     Various  arbitrary  tests  of  partnership  have  been  sug- 
gested from  time  to  time,  such  as — 

(a)  Profit  sharing. 

(b)  Mut^agencx. 

(c)  Intention  of  parties. 

Profit  Sharing. 

It  has  already  been  shown  that  a  mere  sharing  in  the  profits 
of  a  business  is  no  longer  a  conclusive  test  of  partnership, 

N.  Y.  272,  Burdick's  Cases,  50;  Hackett  v.  Stanley,  115  N.  Y.  625,  22 
N.  E.  745;  Cassidy  v.  Hall,  9  7N.  Y.  159;  Burnett  v.  Snyder,  81  N.  Y. 
550,  Mechem's  Cases,  125.  In  Johnson  v.  Alexander,  95  N.  Y.  St.  Rep. 
351,  joint  proprietorship  in  the  profits  is  distinctly  recognized  as  the 
test  of  partnership,  and  yet  it  is  declared  that  with  a  few  recognized 
exceptions,  sharing  profits  renders  one  liable  as  a  partner  to  third 
persons.  The  reasoning  of  Leggett  v.  Hyde,  58  N.  Y.  272,  Burdick's 
Cases,  50,  and  Hackett  v.  Stanley,  115  N.  Y.  625,  22  N.  E.  745,  is 
quoted,  approved,  and  followed. 

In  Pennsylvania,  also,  we  find  a  deliberate  rejection  of  the  rule 
in  Cox  v.  Hickman,  and  the  almost  universally  repudiated  rule  of 
Grace  v.  Smith  and  Waugh  v.  Carver  is  followed  upon  the  principle 
of  stare  decisis.  The  inconvenience  and  injustice  of  the  old  rule  is, 
however,  partially  modified  by  certain  statutory  exceptions.  Never- 
theless, in  cases  not  falling  within  these  statutory  exceptions,  profit- 
sharing  is  still  the  test  of  partnorhip  liability.  Wessels  v.  Weiss, 
166  Pa.  490,  31  Atl.  247;  Edwards  v.  Tracy,  62  Pa.  374;  Lord  v. 
Proctor,  7  Phila.  (Pa.)  630;  Merrall  v.  Dobbins,  169  Pa.  480,  32  Atl. 
578,  Burdick's  Cases,  86.  But  in  Merrall  v.  Dobbins,  169  Pa.  487, 
32  Atl.  578,  Burdick's  Cases,  86,  the  court  intimates  that  the  question 
of  the  true  rule  might  still  be  considered,  and  held  that  the  "inten- 
tion of  the  parties  to  become  joint  owners  of  the  business,"  showed 
conclusively  that  such  persons  were  partners.  So,  also,  In  re  Gibb's 
Estate,  157  Pa.  59,  27  Atl.  383,  the  true  rule  was  distinctly  recognized. 

The  principle  adopted  in  some  jurisdictions,  that  a  person  may  re- 
ceive a  share  of  the  profits  of  a  business  by  way  of  salary,  or  com- 
pensation for  services,  without  being  held  liable  as  a  partner  to 
third  persons,  has  not  been  adopted  here,  and  cannot  be  received 


TESTS  OF  PARTNERSHIP.  19 

either  as  between  the  parties  themselves  or  as  to  third  persons. 
Various  illustrations  of  this  rule  will  be  given  in  a  succeeding 
section.52 

Same — Mutual  Agency  as  a  Test. 

12.  Partners  are  mutual  agents  in  the  conduct  of  the  part- 
nership business,  but  mutual  agency  is  not  a  test  of 
partnership. 

After  the  abandonment  of  profit  sharing  as  a  conclusive 
test  of  partnership,  the  view  has  sometimes  been  taken  that 
Cox  v.  Hickman  substituted  mutual  agency  as  a  test.53     But, 

unless  with  qualifications  that  the  true  character  of  the  agreement 
is  known,  or  the  apparent  relations  of  the  parties  are  such  as  should 
put  parties  dealing  with  them  on  inquiry.  Bromley  v.  Elliot,  38 
N.  H.  287.  But  see  the  later  case  of  Eastman  v.  Clark,  53  N.  H. 
276,  which  is  a  leading  American  case  on  partnership.  See,  also, 
Cossack  v.  Burgwyn,  112  N.  C.  304,  16  S.  E.  900,  and  Southern  Fer- 
tilizer Co.  v.  Reams,  105  N.  C.  283,  11  S.  E.  467. 

52  See  post,  §§  14,  15. 

ss  Shaw  v.  Gait,  16  Ir.  C.  L.  357;  Eastman  v.  Clark,  53  N.  H.  276; 
Lindl.  Partn.  p.  34.  See,  also,  opinion  of  Martin,  B.,  in  Holme  v. 
Hammond,  L.  R.  7  Exch.  218.  The  element  of  agency  for  each  other 
in  and  about  the  business  in  question  is  perhaps  the  most  conclusive 
evidence  of  a  partnership.  Jernee  v.  Simonson,  58  N.  J.  Eq.  282,  43 
Atl.  370,  citing  Cox  v.  Hickman,  8  H.  L.  Cas.  268,  Burdick's  Cases,  65, 
Mechem's  Cases,  70,  and  Wild  v.  Davenport,  48  N.  J.  Law,  135,  7  Atl. 
295,  Burdick's  Cases,  77. 

In  Harvey  v.  Childs,  28  Ohio  St.  319,  Mechem's  Cases,  97,  it  was 
held  that  "participation  in  the  profits  of  a  business,  though  cogent 
evidence  of  a  partnership,  is  not  necessarily  decisive  of  the  question. 
The  evidence  must  show  that  the  persons  taking  the  profits  shared 
them  as  principals  in  a  joint  business,  in  which  each  has  an  express 
or  implied  authority  to  bind  the  other."  On  page  231  of  this  case 
it  was  said:  "Although  a  partnership  may  be  said  to  rest  upon  the 
idea  of  a  communion  of  profits,  nevertheless  the  foundation  of  the 
liability  of  one  partner  for  the  acts  of  another  is  the  relation  they 
sustain  to  each  other  as  being  each  principal  and  agent."  See,  also, 
Merchants'  Nat.  Bank  v.  Standard  Wagon  Co.,  9  Ohio  Dec.  384. 


20  WHAT  CONSTITUTES  A  PARTNERSHIP. 

as  has  been  pointed  out  in  later  English  cases,54  the  referent".' 
to  agency  as  a  test  of  partnership  was  unfortunate  and  incon- 
clusive, inasmuch  as  agency  results  from  partnership,  and  not 
partnership  from  ayncy/""'  Such  a  test  seems  to  give  a 
synonym,  rather  than  a  definition — another  name  for  the  con- 
clusion, rather  than  a  statement  of  the  premises  from  which 
the  conclusion  is  to  be  drawn.  To  say  that  a  person  is  liable 
as  a  partner  who  stands  in  the  relation  of  a  principal  to  those 
by  whom  the  business  is  actually  carried  on  adds  nothing  by 
way  of  precision,  for  the  very  idea  of  partnership  includes  the 
relation  of  principal  and  agent.56 

64  Pooley  v.  Driver,  5  Cli.  Div.  458.  See,  also,  opinion  of  Cleasby, 
B.,  and  Kelly,  C.  B.,  in  Holme  v.  Hammond,  L.  R.  7  Exch.  21S. 

55  Meehan  v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80,  Mechem's 
Cases,  103.  "The  case  [i.  e.,  Cox  v.  Hickman]  did  not  offer  any 
alternative  test  of  a  partnership,  for  the  suggestion  of  the  necessity 
of  an  agency  is  of  no  assistance  in  a  doubtful  case.  The  agency  is 
the  result  of  the  partnership,  not  vice  versa."  Pars.  Partn.  §  43, 
citing  opinion  of  Cleasby,  B.,  in  Holme  v.  Hammond,  L.  R.  7  Exch. 
218,  233.  That  mutual  agency  cannot  be  a  test  of  partnership  is  ap- 
parent from  the  fact  that  several  persons  may  be  partners  because 
that  is  their  intention,  and  yet  one  or  more  of  them  may,  by  stip- 
ulation in  the  partnership  agreement,  be  deprived  of  all  power  to  act 
for  or  in  conjunction  with  the  other  partners,  either  as  principal  or 
agent.  See  Holme  v.  Hammond,  L.  R.  7  Exch.  218;  Pooley  v.  Driver, 
5  Ch.  Div.  458. 

so  Meehan  v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80,  Mechem's 
Cases,  103.  In  Pooley  v.  Driver,  5  Ch.  Div.  458,  Sir  George  Jessel, 
the  master  of  the  rolls,  said:  "You  do  not  help  yourself  in  the- 
slightest  degree  in  arriving  at  a  conclusion  by  stating  that  he  must 
be  an  agent  for  the  others.  It  is  only  stating,  in  other  words,  that 
he  must  be  a  partner,  inasmuch  as  every  partnership  involves  this 
kind  of  agency;  or,  if  you  state  that  he  is  agent  for  the  others,  you 
state  that  he  is  a  partner."  See,  also,  Harvey  v.  Childs,  28  Ohio  St. 
319,  22  Am.  Rep.  387,  Mechem's  Cases,  97. 


TESTS  OF  PARTNERSHIP.  21 

Same — Intention  the  Real  Test. 


13.  The  intention  of  the  parties,  as  gathered  from  a  con- 
struction of  the  contract  they  have  made,  is  the  real  test 
of  the  existence  of  a  partnership. 

As  has  been  seen,  the  distinction  between  partnerships  inter 
se  and  partnerships  as  f,p  third  persons  is  no  longer  recognized. 
Except  in  the  single  case  of  estoppel  by  holding  out,  partner- 
ship liability  depends  upon  the  actual  existence  of  a  partner- 
ship inter  se.  Kow,  since  partnership  is  a  relation  arising 
out  of  a  particular  kind  of  contract,  it  would  seem  to  be  obvi- 
ous that  the  existence  of  the  relation  depends  exclusively  upon 
the  intention  of  the  parties  to  enter  into  that  particular  kind 
of  a  contract,  for  all  contracts  are  construed  according  to  the 
manifest  intent  of  the  parties.  Accordingly,  although  intent 
was  not  formerly  recognized  as  a  test  of  partnership,57  it  is 
now  well  established  that  the  fundamental  rule  to  be  observed 
in  determining  the  existence  of  a  partnership  is  that  regard 
must  be  paid  to  the  true  contract  and  intention  of  the  parties, 
as  appearing  from  all  the  facts  of  the  case.58     But  if  a  parti 

5-  See  ante,  §  9.     See,  also,  Bromley  v.  Elliot,  38  N.  H.  287. 

G8  Cox  v.  Hickman,  8  H.  L.  Cas.  268,  Burdick's  Cases,  65,  Mecheni's 
Cases,  70;  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  419;  Badeley  v. 
Consolidated  Bank,  38  Ch.  Div.  258;  Webster  v.  Clark,  34  Fla.  637, 
16  So.  601;  Bradley  v.  Ely,  24  Ind.  App.  2,  56  N.  E.  44;  Niehoff  v. 
Dudley,  40  111.  406;  Stevens  v.  Faucet,  24  111.  483;  Beecher  v.  Bush, 
45  Mich.  188,  7  N.  W.  785,  Mechem's  Cases,  86,  40  Am.  Rep.  465;  Polk 
v.  Buchanan,  5  Sneed  (Tenn.)  721,  Burdick's  Cases,  62;  A.  N.  Kel- 
logg Newspaper  Co.  v.  Farrell,  88  Mo.  594;  Linter  v.  Millikin,  47  111. 
178;  Salter  v.  Ham,  31  N.  Y.  321;  Gray  v.  Gibson,  6  Mich.  300;  Jernee 
v.  Simonson,  58  N.  J.  Eq.  282,  43  Atl.  370;  Central  City  Sav.  Bank 
v.  Walker,  66  N.  Y.  431;  Hay  ward  v.  Barron,  19  N.  Y.  Supp.  384; 
Earle  v.  Art.  Library  Pub.  Co.,  95  Fed.  548;  National  Surety  Co.  v. 
T.  B.  Townsend  Brick  &  Contracting  Co.,  176  111.  156,  52  N.  E.  938; 
Cannon  v.  Brush  Elec.  Co.,  96  Md.  446,  54  Atl.  121,  94  Am.  St.  Rep. 


XT' 


22  WHAT  CONSTITUTES  A  PARTNERSHIP. 

nership  is  the  legal  result  of  the  agreement  actually  made,  the 
parties  thereto  will  be  partners,  though  they  have  intended  to 
avoid  this  consequence,  or  even  where  they  have  expressly 
stipulated  that   they  arc  not   to  be  partners.50      This  may  be 

584.  Partnership  is  a  fact  depending  upon  agreement,  and  not  a 
mere  matter  of  legal  imputation,  and  the  only  case  in  which  a  per- 
son who  is  sought  to  be  charged  as  a  partner  is  preclued  from  prov- 
ing the  actual  fact  is  when  he  has  held  himself  out,  or  permitted 
himself  to  be  held  out,  as  a  partner.  Boston  &  Colorado  Smelting 
Co.  v.  Smith,  13  R.  I.  34.  As  between  themselves,  though  not  at  to 
third  persons,  the  intent  was  controlling,  even  under  the  old  doc- 
trine as  to  partnership.  See  Wright  v.  Taylor,  9  Wend.  (N.  Y.)  538; 
Ex  parte  Hamper,  17  Ves.  403;  Kerr  v.  Potter,  6  Gill  (Md.)  404; 
Culley  v.  Edwards,  44  Ark.  428.  In  Hazard  v.  Hazard,  1  Story,  374, 
Judge  Story  said  that,  as  to  third  persons,  a  partnership  might  arise 
by  operation  of  law  against  the  intention  of  the  parties,  but  that  a 
partnership  inter  se  exists  only  when  such  is  the  actual  intention  of 
the  parties. 

so  Pooley  v.  Driver,  5  Ch.  Div.  458;  Ex  parte  Delhasse,  7  Ch.  Div. 
511;  Adam  v.  Newbigging,  L.  R.  13  App.  Cas.  315;  Davis  v.  Davis 
(1894),  1  Ch.  Div.  393;  Burdick's  Cases,  12;  Beecher  v.  Bush,  45 
Mich.  188,  7  N.  W.  785;  Mechem's  Cases,  86,  40  Am.  Rep.  465;  Leg- 
gett  v.  Hyde,  58  N.  Y.  272,  Burdick's  Cases,  50;  Chapman  v.  Hughes, 
37  Pac.  1048,  38  Pac.  109,  104  Cal.  302;  Duryea  v.  Whitcomb,  31  Vt. 
395,  Mechem's  Cases,  57;  Bigelow  v.  Elliot,  1  Cliff.  28,  Fed.  Cas. 
No.  1,399;  Manhattan  Brass  &  Mfg.  Co.  v.  Sears,  45  N.  Y.  797,  6  Am. 
Rep.  177;  Rosenfield  v.  Haight,  53  Wis.  260,  10  N.  W.  378;  Huggins 
v.  Huggins,  117  Ga.  151,  43  S.  E.  759;  City  Nat.  Bank  v.  Stone,  131 
Mich.  588,  92  N.  W.  99;  Mulhall  v.  Cheatham,  1  Mo.  App.  476;  Bos- 
ton &  Colorado  Smelting  Co.  v.  Smith,  13  R.  I.  31;  Wehrman  v.  Mc- 
Farlan,  9  Ohio  Dec.  402.  "The  intention  is  ascertained  from  the 
whole  of  the  contract, — from  the  actual  relations  it  creates, — and  not 
from  the  fact  that  the  parties  denominate  it  a  partnership,  or  may 
declare  that  a  partnership  is  not  intended."  Bestor  v.  Barker,  106 
Ala.  240,  17  So.  389. 

In  Adam  v.  Newbigging,  L.  R.  13  App.  Cas.  316,  the  court  said: 
"The  draftsman  apparently  looked  at  all  the  cases,  beginning  at 
Waugh  v.  Carver,  2  H.  Bl.  235;  1  Smith,  Lead.  Cas.  (9th  Ed.)  877, 
Burdick's  Cases,  47,  and  ran  through  them  all,  including  Pooley  v. 
Driver,  5  Ch.  Div.  458;  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  419; 
Ex  parte  Delhasse,  7  Ch.  Div.  511,  and  Ex  parte  Tennant,  6  Ch.  Div. 
303,  and  cleverly  strives  to  avoid  the  effect  of  each  test  discussed 


TESTS  OF  PARTNERSHIP.  23 

thought  to  violate  the  rule  that  the  inteut  is  controlling,60  but 
it  does  not.  The  intent  which  is  controlling  is  the  intent  to  do 
those  things  which  the  law  has  declared  constitute  a  partner- 
ship. If  the  parties  intend  and  do  those  things  which  the 
laws  says  constitute  a  partnership,  then  theparties  are  ipso, 
facto  partncis,  and  an  express  stipulation  that  they  do  not  in- 
tend to  form  a  partnership  simply  shows  that  they  have  mis- 
taken the  legal  effect  of  the  agreement  which  they  intended  to 
make.61  If  the  parties  make  an  agreement  which  is  a  part- 
in  these  cases  by  something  which  should  have  the  same  effect,  but 
which  should  avoid  the  specific  test.  I  wish  to  say  every  such  ex- 
pedient would  be  absolutely  void  in  the  view  I  take  of  the  law." 

co  In  London  Assur.  Co.  v.  Drennen,  116  U.  S.  461,  it  was  said  that, 
as  between  the  parties  themselves  the  letter  of  the  agreement  con- 
trols. In  Sailors  v.  Nixon-Jones  Printing  Co.,  20  111.  App.  509,  the 
court  said:  "A  partnership  inter  se  must  result  from  the  intention 
of  the  parties  as  expressed  in  the  contract,  and  they  can  not  be 
made  to  assume  toward  each  other  a  relation  which  they  have  ex- 
pressly contracted  not  to  assume.  The  terms  of  the  agreement, 
where  there  is  one,  fixes  the  real  status  of  the  parties  toward  each 
other."  If  parties  associated  in  business  in  such  a  manner  as  to 
make  them  partners  with  respect  to  third  persons  expressly  agree 
that  a  partnership  shall  not  exist,  they  are  not  partners  as  between 
themselves.  Gill  v.  Kuhn,  6  Serg.  &  R.  (Pa.)  332.  See,  also,  Kerr 
v.  Potter,  6  Gill    (Md.)   404. 

ci  Bradley  v.  Ely,  24  Ind.  App.  2,  56  N.  E.  44,  citing,  with  approval, 
George,  Partn.  p.  31.  In  Pooley  v.  Driver,  5  Ch.  Div.  458,  an  agree- 
ment very  carefully  drawn,  with  the  intention  of  excluding  any  in- 
ference of  a  partnership  between  the  contracting  parties  was  held, 
nevertheless,  to  create  a  partnership.  The  court  said  (page  483) : 
"What  they  did  not  intend  was  to  incur  the  liability  of  partners. 
If  intending  to  be  a  partner  is  intending  to  take  the  profits,  then 
they  did  intend  to  be  partners.  If  intending  to  take  the  profits,  and 
have  the  business  carried  on  for  their  benefit,  was  intending  to  be 
partners,  they  did  intend  to  be  partners.  If  intending  to  see  that 
the  money  was  applied  for  that  purpose,  and  for  no  other,  and  to 
exercise  an  efficient  control  over  it,  so  that  they  might  have  brought 
an  action  to  restrain  it  from  being  otherwise  applied,  and  so  forth, 
was  intending  to  be  partners,  then  they  did  intend  to  be  partners." 

"The  real  inquiry  always  is,  have  the  parties  by  their  contract, 


04  WHAT  CONSTITUTES  A  PARTNERSHIP. 

nership  in  fact,  it  is  of  no  importance  that  they  call  it  some- 
thing else.  Names  go  for  nothing  when  the  substance  of  the 
arrangement  shows  them  to  be  inapplicable.62  Persons  may 
become  partners  without  their  knowing  it;  the  relation  result- 
ing from  the  terms  tkey  liave  used  in  the  contract,  or  from 
the  nature  of  the  undertaking.03     On  the  other  hand,  even  if 

combined  their  property,  labor  or  skill  in  an  enterprise  or  business, 
as  principals,  for  the  purpose  of  joint  profit?  If  they  have  done  so, 
they  are  partners  in  that  business  or  enterprise,  no  matter  how 
earnestly  they  may  protest  they  are  not,  or  how  distant  the  forma- 
tion of  a  partnership  was  from  their  minds.  The  terms  of  their 
contract  given,  the  law  steps  in  and  declares  what  their  relations 
are  to  the  enterprise  or  business,  and  to  each  other."  Spaulding  v. 
Stubbings,  86  Wis.  255,  56  N.  W.  469,  Mechem's  Cases,  117.  See, 
also,  Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484. 

62  Per  Cooley,  J.,  in  Beecher  v.  Bush,  45  Mich.  1S8,  7  N.  W.  785,  40 
Am.  Rep.  465,  Mechem's  Cases,  86,  quoted  with  approval  in  Webster 
v.  Clark,  34  Fla.  637,  16  So.  601.  "The  intent  of  the  parties  must 
be  ascertained  from  the  legal  effect  of  the  instrument,  and  not  the 
names  employed  by  the  parties."  Van  Kuren  v.  Trenton  L.  &  M. 
Mfg.  Co.,  13  N.  J.  Eq.  306.  "Persons  may  become  copartners,  with- 
out a  special  agreement  for  the  purpose,  by  virtue  of  the  effect 
which  the  law  gives  to  an  undertaking  for  the  use  of  a  common 
capital,  with  division  of  profits  and  losses,  in  continuous  transac- 
tions, though  carried  on  in  an  incidental  manner.  Therefore,  if  the 
plaintiff,  without  a  special  or  express  agreement  to  form  a  partner- 
ship, contributed  a  fund  to  be  invested,  as  occasion  offered,  in  notes, 
stocks,  and  the  like,  and  agreed  to  share  the  gains  and  losses  there- 
of between  them,  they  thereby  became  partners  in  the  view  of  the 
law,  and  the  court  properly  instructed  the  jury  to  that  effect,  as 
requested  by  the  plaintiffs."  Robinson  v.  Parker,  11  App.  Cas. 
(D.  C.)    140. 

as  Lintner  v.  Millikin,  47  111.  181.  It  is  immaterial  that  the  par- 
ties are  not  aware  of  the  legal  consequences  of  their  acts.  Such 
consequences  attach,  nevertheless.  Mulhall  v.  Cheatham,  1  Mo.  App. 
481.  In  Chapman  v.  Hughes,  104  Cal.  304,  37  Pac.  1048,  37  Pac.  109, 
the  court  said:  "Whether  the  parties  knew  they  were  partners  or 
not,  they  certainly  intended  and  contracted  to  do  all  that  in  law  is 
necessary  to  create  a  partnership.  The  relation  of  partnership  may 
be  established,  although  the  parties  may  not  expressly  intend  to 
create  such  relationship." 


TESTS  OF  PARTNERSHIP.  25 

the  parties  intend  to  be  partners,  and  so  expressly  stipulate, 
yet,  if  they  so  frame  the  terms  and  provisions  of  their  con- 
tract as  to  leave  them  without  any  community  of  interest  in 
the  business  or  profits,  they  are  not  partners  in  fact  or  in 
law.64  Of  course,  in  a  doubtful  case,  the  expressed  intent  may 
be  sufficient  to  turn  the  scales  one  way  or  the  other,05  and,  if 
the  expressed  intent  is  not  inconsistent  with  the  other  terms  of 
the  contract,  it  will  be  controlling.66  Where  the  rights  of 
third  person*  are  not  involved,  the  contract  will  be  liberally 

I  --• ■■■■     ■    -    -       --■    -T-ifo    c -  — mm— iiunjiwuniiwuMWiTTr m trr- 

construed,  so  as  to  effectuate  the  actual  understanding  of  the 
parties,  and  the  purposes  they  had  in  view.67       \l 

m  Sailors  v.  Nixon-Jones  Printing  Co.,  20  111.  App.  509,  Mechem's 
-Cases,  53;  McDonald  v.  Matney,  82  Mo.  358,  366;  Dwinel  v.  Stone, 
30  Me.  384,  Burdick's  Cases,  17;  Livingston  v.  Lynch,  4  Johns.  Ch. 
(N.  Y.)  573,  592;  Burnett  v.  Snyder,  76  N.  Y.  344;  Van  Kuren  v. 
Trenton  L.  &  M.  Mfg.  Co.,  13  N.  J.  Eq.  302,  306;  Ryder  v.  Wilcox,  103 
Mass.  24,  Burdick's  Cases,  525;  Oliver  v.  Gray,  4  Ark.  425,  Burdick's 
Cases,  16;  Hayward  v.  Barron,  19  N.  Y.  Supp.  384. 

es  "  A  clause  negativing  a  partnership  may  throw  light  on  other 
clauses,  and  rebut  inferences  which  might  be  drawn  from  them 
alone."  Lindl.  Partn.  p.  11.  "Every  doubtful  case  must  be  solved 
in  favor  of  their  intent;  otherwise,  we  should  carry  the  doctrine  of 
constructive  partnership  so  far  as  to  render  it  a  trap  to  the  unwary." 
Beecher  v.  Bush,  45  Mich.  188,  7  N.  W.  785,  40  Am.  Rep.  465, 
Mechem's  Cases,  86,  citing  Kent,  C.  J.,  in  Post  v.  Kimberly,  9  Johns. 
(N.  Y.)   504. 

ee  Gill  v.  Kuhn,  6  Serg.  &  R.  (Pa.)  333;  Kerr  v.  Potter,  6  Gill 
(Md.)  404;  Smith  v.  Walker,  57  Mich.  456,  22  N.  W.  267,  24  N.  W. 
830,  26  N.  W.  783;  Runnels  v.  Moffat,  73  Mich.  188,  41  N.  W.  224; 
Reddington  v.  Lanahan,  59  Md.  429;  Paul  v.  Cullum,  132  U.  S.  539, 
551;  Pillsbury  v.  Pillsbury,  20  N.  H.  90.  An  agreement  which  pur- 
ports on  its  face  to  be  a  copartnership  agreement,  and  which  pro- 
vides that  the  parties  thereto  shall  share  equally  in  expenses,  losses, 
and  gains,  cannot  be  treated  as  a  mere  contract  of  employment. 
Smith  v.  Walker,  57  Mich.  456,  22  N.  W.  267,  24  N.  W.  830,  26  N.  W. 
783. 

«17  Am.  &  Eng.  Enc.  Law  (1st  ed.),  p.  834,  citing  Stevens  v. 
Gainesville  Nat.  Bank,  62  Tex.  499;  Hitchings  v.  Ellis,  12  Gray 
(Mass.)  452;  Couch  v.  Woodruff,  63  Ala.  466;  Tayloe  v.  Bush,  75  Ala. 
432. 


26  WHAT  CONSTITUTES  A  PARTNERSHIP. 

Same — What  Must  be  Intended — Common  Ownership 

of  Profits. 

14.  Where  the  intention  of  the  parties  to  a  contract  is  to 
carry  on  a  business,  and  share  the  profits  between  them 
as  common  owners,  a  partnership  is  created.- 

15.  Where  the  intention  is  not  to  share  the  profits  as  com- 
mon owners,  but  as  a  personal  debt  due  from  some  of 
the  associates  to  the  others,  the  amount  of  which  is 
measured  by  the  profits,  no  partnership  is  created. 

The  ultimate  and  conclusive  test  of  a  partnership  is  cq- 

owiievship  of  the  profits  u£  q  business. GS  ''Where  ;i  part  of 
the  profits  themselves  is  the  property  of  the  party,  he  is  a 
partner.  Where  their  amount  merely  ascertains  the  amount 
of  a  debt  or  duty,  hut  they  themselves  do  not  belong  to  the 
party,  there  is  not  a  partnership."  C9  "If  there  is  a  commun- 
es Bradley  v.  Ely,  24  Ind.  App.  2,  56  N.  E.  44,  79  Am.  St.  Rep.  251; 
Le  Fevre  v.  Castagnio,  5  Colo.  564.  See,  also,  cases  cited  in  the  suc- 
ceeding part  of  this  section  in  illustration  of  the  rule.  "One  essential 
element  of  a  partnership  is  a  community  of  interest  in  the  subject- 
matter  of  it.  Tenet  totum  in  communi  et  nihil  separatim  per  se,  has 
been  the  keystone  of  the  arch  since  the  days  of  Bracton.  From  this 
arises  the  right  of  each  partner  to  make  contracts,  incur  liabilities, 
manage  the  whole  business,  and  dispose  of  the  whole  property  of 
the  partnership,  for  its  purposes,  in  the  same  manner  and  with  the 
same  power,  as  all  the  partners  could  when  acting  together."  Dwinel 
v.  Stone,  30  Me.  384,  Burdick's  Cases,  17.  But  it  must  be  noted  in 
this  connection,  that  "the  subject-matter"  of  a  partnership  may  be 
merely  the  profits.  It  is  not  necessary  that  there  should  be  a  com- 
munity of  interest  in  the  property  or  capital  employed  to  earn  the 
profits.     See  infra,  §  22. 

go  Per  Henderson,  C.  J.,  in  Cox  v.  Delano,  3  Dev.  (N.  C.)  90.  It 
should  be  noted  that  this  happy  and  accurate  statement  of  the  one 
essential  element  of  a  partnership  was  made  in  1831,  nearly  thirty 
years  before  the  decision  of  the  celebrated  case  of  Cox  v.  Hickman. 
See,  also,  to  the  same  effect,  Waggoner  v.  First  Nat.  Bank,  43  Neb. 


gft,  C»"*WA***  #•"*•*  h^^  ~" 


TESTS  OF  PARTNERSHIP.  27 

ity  of  profits,  a  partnership  follows.  Community  of  profits 
means  a  proprietorship  in  them,  as  distinguished  from  a  per- 
sonal claim  upon  the  other  associates.  In  other  words,  a 
property  right  in  them  from  the  start,  in  one  associate  as  much 
as  in  the  other."  70     Where  there  is  such  a  community  of 

84,  61  N.  W.  112;  Webster  v.  Clark,  34  Fla.  637,  16  So.  601;  Meehan 
v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80,  Mechem's  Cases,  103; 
Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484;  Palliser  v.  Erhardt  (Sup.), 
61  N.  Y.  192;  Oppenheimer  v.  Clemmons,  18  Fed.  888.  "Whether  a 
man  is  a  partner  or  not  depends  upon  the  nature  of  his  interest  in 
the  profits.  ...  If  his  interest  is  that  of  owner,  then  he  is  a 
partner;   otherwise  not."    Wheeler  v.  Farmer,  38  Cal.  205. 

"A  person  may  be  allowed,  in  special  cases,  to  receive  part  of  the 
profits  of  a  business,  without  become  a  legal  or  responsible  partner, 
where  the  whole  evidence  leads  to  the  conclusion  that  the  receiver 
of  the  money  took  it  only  as  wages,  or  specific  compensation  or  pay- 
ment, and  did  not  intend  to  acquire  any  interest  in,  or  control  over, 
the  business,  or  in  the  profits  as  they  accrue,  and  before  they  are 
ascertained  and  divided,  but  only  after  they^were  ascertained  to  find 
in  them  the  fund,  and  in  this  amount  the  measure  of  his  payment." 
Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  838. 

The  statement  met  with  in  the  cases  both  before  and  since  Cox  v. 
Hickman,  that  a  person  must  be  interested  in  the  profits  "as  profits," 
is  a  recognition  of  the  true  rule.  In  Grace  v.  Smith,  2  W.  Bl.  998, 
Burdick's  Cases,  45,  Mechem's  Cases,  61,  which  is  the  very  fountain 
head  of  the  profit-sharing  rule,  the  distinction  between  sharing 
profits  as  profits  (i.  e.,  sharing  them  as  proprietors),  and  merely  re- 
lying upon  profits  as  a  fund  for  payment,  is  distinctly  recognized. 
The  long  line  of  cases  holding  that  any  sharing  of  profits  was  suffi- 
cient to  make  one  liable  as  a  partner  finds  but  little  support  in  this- 
case.  "Interest  in  profits  does  not  necessarily  make  a  person  a  part- 
ner, or  liable  as  a  partner.  Pars.  Partn.  67.  To  have  that  effect, 
it  must  be,  as  the  books  express  it,  an  interest  in  profits  as  profits — 
a  proprietary  interest,  or  as  Mr.  Justice  Clifford  says,  in  Berthold 
v.  Goldsmith,  24  How.  (U.  S.)  537,  'the  party  must  be  in  some  way 
interested  in  the  profits  as  principal.'  Or,  as  expressed  in  Harvey  v. 
Childs,  28  Ohio  St.  319,  'the  evidence  must  show  that  the  persons  tak- 
ing the  profits  shared  them  as  principals  in  a  joint  business,  in  which 
each  has  an  express  or  implied  authority  to  bind  the  others.  Le 
Fevre  v.  Castagnio,  5  Colo.  571. 

to  Bradley  v.  Ely,  24  Ind.  App.  2,  56  N.  E.  44,  quoting,  with  ap- 


2S  WHAT  CONSTITUTES  A  PARTNERSHIP. 

ownership  in  the  profits,  the  parties  are  aecessarily  mutual 
principals  and  agents  in  carrying  on  the  business,  and  earning 
the  profits,  and,  as  lias  been  -ecu,  Buch  a  relation  is  a  synonym 
of  partnership.71 

The  rule  here  staled  is  clear  enough.  The  difficulty  is  in 
its  application.  The  true  intention  of  the  parties,  as  appear- 
ing from  all  the  facts  and  circumstances  of  the  case,  is  con- 
trolling. If,  so  construed,  the  contract  manifests  an  intention 
to  he  joint  owners  of  the  profits,  it  constitutes  a  partnership; 
otherwise  not.  This  intention  is  no  longer  ascertained  by  the 
application  of  any  arbitrary  tests.72  It  is  obviously  almost 
impossible  to  define  accurately  what  are  the  states  or  circum- 
stances which  establish  the  intention  to  be  partners,  or  mutual 
agents.  Capital  embarked,  powers  of  interference  in  the 
business,  profits  received,  etc.,  arc  all  circumstances  to  be 
taken  into  consideration  in  deciding  the  question.73 

proval,  George,  Partn.  p.  50.  And  see  Gulf  City  Shingling  Co.  v. 
Boyles,  129  Ala.  192,  29  So.  800. 

71  See  George,  Partn.,  p.  52. 

"  Beecher  v.  Bush,  45  Mich.  188,  7  N.  W.  785,  Mechem's  Cases,  86, 
wherein  Cooley,  J.,  said:  "So  far  as  the  notion  ever  took  hold  of  the 
judicial  mind  that  the  question  of  partnership  or  no  partnership  was 
to  be  settled  by  arbitrary  tests,  it  was  erroneous  and  mischievous, 
and  the  proper  corrective  has  been  applied."  See,  also,  Eastman  v. 
Clark,  53  N.  H.  276,  wherein  the  results  of  Cox  v.  Hickman,  supra, 
are  discussed  in  an  elaborate  opinion,  reviewing  many  cases.  As 
between  the  parties,  the  question  of  the  existence  of  a  partnership 
relation  is  one  of  intention,  to  be  gathered  from  all  the  facts  and 
circumstances.  National  Surety  Co.  v.  T.  B.  Townsend  Brick  &  Con- 
tracting Co.,  176  111.  156,  52  N.  E.  938.  Where  there  is  no  written 
agreement  between  the  parties,  their  intention  may  be  inferred  from 
their  course  of  conduct,  and  admissions  with  respect  to  the  business 
carried  on.    Earle  v.  Art  Library  Pub.  Co.,  95  Fed.  548. 

"3  Parker  v.  Canfield,  37  Conn.  250;  Ex  parte  Tennant,  6  Ch.  Div. 
315;  Waggoner  v.  First  Nat.  Bank,  43  Neb.  84,  61  N.  W.  112.  See, 
also,  infra,  §  16,  "Sharing  Profits  as  Evidence  of  Intention;"  and 
infra,  §  22,  "Common  Stock  or  Capital."  A  lender  does  not  become 
a  partner  by  taking  profits  instead  of  interest  for  his  loan,  where  he 


..  TESTS  OF  PARTNERSHIP.  29 

Under  the  rule  here  stated,  persons  sharing  the  profits  of  a 
business  under  the  following  circumstances  have  been  held  not 
to  be  partners  by  reason  of  such  participation  in  the  profits, 
viz. :  A  creditor  receiving  payment  of  his_debt  by  instalments, 
or  othe^wj.se,  out  of  the  profits  of  a  business.;  74  a  servant  or 
agent  employed  in  the  business,  and  remunerated  by  a  share 
of  the  pmiils  in  lieu  uf  salary;  '"'  a |  widow  or  child  of  a  de- 
relinquishes  the  money  to  the  borrower,  and  does  not  retain  control 
over  it  in  the  partnership  business.  Ellison  v.  Stuart,  2  Pen.  (Del.) 
179,  43  Atl.  836.  The  best  evidence  of  the  existence  of  a  partnership 
is  the  contract  creating  it.  If  proof  of  the  contract  is  not  within 
reach,  its  existence  may  be  inferred  (1)  from  proof  of  contribution 
to  the  partnership  stock;  (2)  from  participation  in  profits;  and 
(3)  from  the  acts  and  declarations  of  the  parties  sought  to  be 
charged.    In  re  Gibb's  Estate,  157  Pa.  59,  27  Atl.  383. 

"Where  the  suit  is  between  the  parties  as  partners,  stricter  proof 
is  required  of  the  existence  of  the  partnership,  than  where  the  ac- 
tion is  by  a  third  person  against  either  actual  partners,  or  persons 
sought  to  be  charged  as  partners,  inasmuch  as  the  latter  are  more 
likely  to  know  the  means  whereby  the  fact  of  partnership  may  be 
proved  than  such  third  persons."  Ellison  v.  Stuart,  2  Pen.  (Del.), 
43  Atl.  838. 

~*  Cox  v.  Hickman,  8  H.  L.  Cas.  268,  Burdick's  Cases,  65,  Mechem's 
Cases,  70. 

-o  Stafford  v.  Sibley,  106  Ala.  189,  17  So.  324;  Randle  v.  State,  49 
Ala.  14;  Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  838;  Wheeler  v. 
Farmer,  38  Cal.  203;  Thornton  v.  McDonald,  108  Ga.  3,  33  S.  E.  680; 
Le  Fevre  v.  Castagnio,  5  Colo.  564;  Loomis  v.  Marshall,  12  Conn.  70; 
Parker  v.  Canfield,  37  Conn.  250;  Vinson  v.  Beveridge,  3  MacArthur 
(D.  C.)  597;  Podgett  v.  Ford,  117  Ga.  508;  Niehoff  v.  Dudley,  40  111. 
406;  Parker  v.  Fergus,  43  111.  437;  Mayfield  v.  Turner,  180  111.  332, 
54  N.  E.  418;  Burton  v.  Goodspeed,  69  111.  327;  National  Surety  Co. 
v.  T.  B.  Townsend  Brick  &  Contracting  Co.,  176  111.  156,  52  N.  E.  938; 
Pierpont  v.  Lanphere,  104  111.  App.  232;  Ellsworth  v.  Pomeroy,  26 
Ind.  158;  Price  v.  Alexander,  2  G.  Greene  (Iowa)  427,  52  Am.  Dec. 
526;  Holbrook  v.  Oberne,  56  Iowa,  324,  9  N.  W.  291;  Porter  v.  Cur- 
tis, 96  Iowa,  539,  65  N.  W.  824;  Johnson  v.  Carter,  120  Iowa,  355, 
94  N.  W.  850;  Shepard  v.  Pratt,  16  Kan.  209;  Donley  v.  Hall,  5  Bush 
(Ky.)  549;  Holden  v.  French,  68  Me.  241;  Kerr  v.  Potter,  6  Gill' 
(Md.)  404;  Sangston  v.  Hack,  52  Md.  173;  Reddington  v.  Lanahan, 
59  Md.  429;  Whiting  v.  Leakin,  66  Md.  255,  7  Atl.  688;  Rowland  v. 


30  WHAT  CONSTITUTES  A  PARTNERSHIP. 

ceased  partner  receiving,  by  way  of  annuity,  a  portion  of  the 
nroiit.s:  7i;  ;i  person  who  lias  loaned  money  to  another  engaged, 
or  about  to  engage,  in  business,  on  a  contract  with  him  that 

Long,  45  Md.  439;  Taylor  v.  Terme,  3  Harr.  &  J.  (Md.)  505;  Holmes  v. 
Old  Colony  R.  Co.,  5  Gray  (Mass.)  58;  Com.  v.  Bennett,  118  Mass. 
443;  Morrow  v.  Murphy,  120  Mich.  204,  79  N.  W.  193,  80  N.  W.  255; 
Morrison  v.  Cole,  30  Mich.  102;  Stockman  v.  Michell,  109  Mich.  348, 
67  N.  W.  336;  Waggoner  v.  First  Nat.  Bank,  43  Neb.  84,  61  N.  W. 
112;  Day  v.  Stevens,  88  N.  C.  83;  Mauney  v.  Coit,  86  N.  C.  463;  New- 
man v.  Bean,  21  N.  H.  93;  Eastman  v.  Clark,  53  N.  H.  276;  Stone  v. 
West  Jersey  Ice  Mfg.  Co.,  65  N.  J.  Law,  20,  46  Atl.  696;  Mason  v. 
Hackett,  4  Nev.  420;  Richardson  v.  Hughitt,  76  N.  Y.  55;  Prouty  v. 
Swift,  51  N.  Y.  594;  Leggett  v.  Hyde,  58  N.  Y.  272,  Burdick's  Cases, 
50;  Cassidy  v.  Hall,  97  N.  Y.  159;  Hayward  v.  Barron  (Com.  PL), 
19  N.  Y.  Supp.  383;  Winne  v.  Brundage  (Sup.),  40  N.  Y.  Supp.  225; 
Hunt  v.  McCabe,  40  Misc.  (N.  Y.)  461;  McArthur  v.  Ladd,  5  Ohio, 
514;  Boston  &  Colorado  Smelting  Co.  v.  Smith,  13  R.  I.  31;  State  v. 
Hunt  (R.  I.),  54  Atl.  937;  Chapman  v.  Lipscomb,  18  S.  C.  233;  Polk 
v.  Buchanan,  5  Sneed  (Tenn.)  721,  Burdick's  Cases,  62;  Buzard  v. 
First  Nat.  Bank,  67  Tex.  83;  Tex.  &  Pac.  R.  Co.  v.  Smissen,  31  Tex. 
Civ.  App.  549,  73  S.  W.  42;  La  Flex  v.  Bursa,  77  Wis.  538,  46  N.  W. 
801;  Sohns  v.  Sloteman,  85  Wis.  113,  55  N.  W.  158;  Bigelow  v.  Elliot, 
1  Cliff.  28,  Fed.  Cas.  No.  1,399;  Ross  v.  Parkyns,  L.  R.  20  Eq.  331; 
Rawlinson  v.  Clarke,  15  Mees.  &  W.  292;  In  re  Gibb's  Estate,  157  Pa. 
59,  27  Atl.  383.  Compare  Hackett  v.  Stanley,  115  N.  Y.  625,  22  N.  E. 
745,  Burdick's  Cases,  57.  Contra,  Miller  v.  Hughes,  1  A.  K.  Marsh. 
(Ky.)  181;  Taylor  v.  Terme,  3  Har.  &  J.  (Md.)  506,  overruled  in 
Whiting  v.  Leakin,  66  Md.  255,  7  Atl.  688. 

"The  legal  rule,  that  accepting  a  percentage  of  profits  in  compen- 
sation for  services  does  not  create  a  copartnership,  is  so  well  settled 
that  it  is  scarcely  necessary  to  repeat  it  here."  Hayward  v.  Barron 
(Com.  PL),  19  N.  Y.  Supp.  384,  citing  Cassidy  v.  Hall,  97  N.  Y.  159; 
Conklin  v.  Tuthill,  10  N.  Y.  St.  Rep.  624;  Richardson  v.  Hughitt,  76 
N.  Y.  58;  Salter  v.  Ham,  31  N.  Y.  321;  Curry  v.  Fowler,  87  N.  Y.  33; 
Burnett  v.  Snyder,  76  N.  Y.  344;  Edwards  v.  Dooley,  13  N.  Y.  St.  Rep. 
602;  De  Cordova  v.  Powter,  8  N.  Y.  St.  Rep.  431;  Adams  v.  Morrison, 
113  N.  Y.  152,  20  N.  E.  829;  Burckle  v.  Eckhart,  3  N.  Y.  138;  Eager 

"«Waugh  v.  Carver,  2  H.  Bl.  235,  Burdick's  Cases,  47,  Mechem's 
Cases,  67;  Jones  v.  Walker,  103  U.  S.  444,  Mechem's  Cases,  391; 
Philips  v.  Samuel,  76  Mo.  657.  See,  also,  Pitkin  v.  Pitkin,  7  Conn. 
307. 


TESTS  OF  PARTNERSHIP.  31 

the  lender  shall  receive  a  rate  of  interest  varying  with  the 
profits,  or  a  portion  of  the  profits  of  the  business,  in  lieu  of 
interest ;  77  a  person  receiving  a  share  of  profits  in  lieu  of  rent 

v.  Crawford,  76  N.  Y.  97.  That  the  amount  of  one's  compensation  is 
uncertain,  and  depends  upon  the  various  contingencies  of  the  busi- 
ness, does  not  make  him  any  the  less  an  agent.  Newman  v.  Bean, 
21  N.  H.  93.  "The  law  allowing  agents  to  receive  shares  of  profits  as 
compensation  for  services  is  based  upon  grounds  of  public  policy, 
because  it  constitutes  an  incentive  to  extra  exertion,  and  does  not 
infringe  upon  the  rights  of  creditors,  or  the  rules  of  public  policy; 
since,  if  there  are  profits,  the  creditors  get  their  pay,  and  are  sat- 
isfied, and,  if  there  are  no  profits,  the  agents  get  nothing."  Parker 
v.  Canfield,  37  Conn.  257.   See,  also,  Loomis  v.  Marshall,  12  Conn.  69. 

In  Pennsylvania  it  is  provided  by  statute  that  individuals  and  cor- 
porations may  share  profits  with  employees  in  lieu  of  wages,  with- 
out creating  a  partnership  either  inter  se  or  as  to  third  persons. 
Pep.  &  L.  Pa.  Dig.  tit.  "Partnership,"  §  17.  See,  also,  Edwards  v. 
Tracy,  62  Pa.  374;  Dale  v.  Pierce,  85  Pa.  474. 

77  in  re  Young  [1896],  2  Q.  B.  Div.  484;  Cassidy  v.  Hall,  97  N.  Y. 
159;  Meehan  v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80, 
Mechem's  Cases,  103;  Thillman  v.  Benton,  82  Md.  64,  33  Atl.  485, 
Burdick's  Cases,  85;  Leggett  v.  Hyde,  58  N.  Y.  272,  Burdick's  Cases, 
50;  Richardson  v.  Hughitt,  76  N.  Y.  55;  Curry  v.  Fowler,  87  N.  Y.  33; 
Jones  v.  Walker,  103  U.  S.  444,  Mechem's  Cases,  391;  Grace  v.  Smith, 
2  H.  Bl.  998,  Burdick's  Cases,  45;  Boston  &  Colorado  Smelting  Co.  v. 
Smith,  13  R.  I.  27;  Culley  v.  Edwards,  44  Ark.  423;  Niehoff  v.  Dudley, 
40  111.  406;  Smith  v.  Vanderburg,  46  111.  34;  Lintner  v.  Millikin,  47 
111.  178;  Cadenasso  v.  Antonelle,  127  Cal.  382,  59  Pac.  765;  Hunter 
v.  Conrad,  18  Mont.  177,  44  Pac.  523;  Ellison  v.  Stuart,  2  Pen.  (Del.) 
179,  43  Atl.  838;  Palliser  v.  Erhardt,  46  App.  Div.  222,  61  N.  Y.  Supp. 
191;  Waggoner  v.  First  Nat.  Bank,  43  Neb.  84,  61  N.  W.  112;  Sheri- 
dan v.  Medara,  10  N.  J.  Eq.  477;  Jernee  v.  Simonson,  58  N.  J.  Eq. 
282,  43  Atl.  373.  But  see  Hackett  v.  Stanley,  115  N.  Y.  625,  22  N.  E. 
745,  Burdick's  Cases,  57. 

"It  [i.  e.,  the  profit-sharing  rule]  was  soon  relaxed  in  favor  of 
agents  or  servants,  who,  it  was  held,  might  take  a  share  of  profits  by 
way  of  compensation  for  their  services  without  becoming  quasi-part- 
ners.  The  English  courts,  however,  refused  to  extend  the  exception 
to  cover  a  loan  of  money,  though,  upon  principle,  it  is  impossible  to 
discern  any  difference  whether  a  portion  of  the  profits  goes  to  pay 
for  services  or  for  money  contributed  to  the  business.  Mr.  Lindley, 
in  his  excellent  work  on  "Partnership,"  suggests  that  this  difference 


WHAT  CONSTITUTES  A  PARTNERSHIP. 

for  the  use  of  property,  either  real  or  personal.78  This  enu- 
meration of  applications  is  illustrative  only,  l>ut  it  is  believed 
that  no  modern  ease  presents  an  inconsistent  application. 

of  decision  was  owing  to  the  statutes  against  usury,  because,  in 
many  cases,  a  loan  of  money  for  a  share  of  profits  could  only  be  up- 
hold by  regarding  the  lender  as  a  partner."  Boston  &  Colorado 
Smelting  Co.  v.  Smith.  13  R.  I.  31,  citing  Lindl.  Partn.  (3d  ed.) 
23  25.  [f  a  party  is  to  receive  profits  in  consideration  of  furnishing 
capital,  he  is  clearly  a  partner;  and  he  is  a  partner  as  to  third  per- 
sons, even  though  it  should  be  stipulated  that  the  capital  so  fur- 
nished should  be  regarded  as  a  loan,  and  the  party  furnishing  it  a 
mere  creditor.  Parker  v.  Canfield,  37  Conn.  250.  But  see  Eastman 
v.  Clark,  53  N.  H.  276. 

In  Pennsylvania,  it  is  provided  by  statute  that  a  share  of  profits 
may  be  taken  in  lieu  of  interest  without  creating  a  partnership,  ex- 
cept so  far  as  the  money  loaned  is  concerned,  provided  the  agreement 
is  in  writing.  If  the  agreement  is  not  in  writing,  the  lender  will  be 
liable  as  a  partner  to  third  persons.  Wessels  v.  Weiss,  166  Pa.  490, 
31  Atl.  247;  Hart  v.  Kelley,  83  Pa.  286;  Eshleman  v.  Harnish,  76  Pa. 
97;  Irwin  v.  Bidwell.  72  Pa.  244. 

-sHawley  v.  Dixon,  7  U.  C.  Q.  B.  218;  Great  Western  Ry.  Co.  v. 
Preston  &  B.  Ry.  Co.,  17  U.  C.  Q.  B.  477;  McDonnell  v.  Battle  House 
Co.,  67  Ala.  90;  Quackenbush  v.  Sawyer,  54  Cal.  439,  Burdick's  Cases, 
25;  Smith  v.  Vanderburg,  46  111.  34;  Parker  v.  Fergus,  43  111.  437; 
Keiser  v.  State,  58  Ind.  379;  Reed  v.  Murphy,  2  G.  Greene  (Iowa) 
574;  Thompson  v.  Snow,  4  Me.  264;  Bridges  v.  Wm.  C.  Sprague  & 
Pembroke  Iron  Co.,  57  Me.  543;  La  Mont  v.  Fullam,  133  Mass.  583; 
Holmes  v.  Old  Colony  R.  Co.,  5  Gray  (Mass.)  58;  Beecher  v.  Bush, 
4."  .Mich.  188,  7  N.  W.  785,  Mechem's  Cases,  86;  Thayer  v.  Augustine, 
".-,  Mich.  187,  20  N.  W.  898;  A.  N.  Kellogg  Newspaper  Co.  v.  Farrell, 
88  Mo.  594;  Perrine  v.  Hankinson,  11  N.  J.  Law,  181;  Heimstreet  v. 
Howland,  5  Denio  (N.  Y.)  68;  Dake  v.  Butler,  7  Misc.  Rep.  (N.  Y.) 
302;  Johnson  v.  Miller,  16  Ohio,  431;  Brown  v.  Jaquette,  94  Pa.  113; 
Felton  v.  Deall,  22  Vt.  170;  Tobias  v.  Blin,  21  Vt.  544;  Garrett  v.  Re- 
publican Pub.  Co.,  61  Neb.  541,  85  N.  W.  537.  Contra,  Adams  v.  Car- 
ter, 53  Ga.  160;  Holifield  v.  White,  52  Ga.  567. 

•In  Holmes  v.  Old  Colony  R.  Co.,  5  Gray  (Mass.)  58,  it  was  held 
that  a  railroad  corporation,  by  leasing  a  house  owned  by  it  to  a  party 
to  be  run  as  a  hotel,  the  lessee  to  pay  a  certain  sum  annually,  and 
half  the  net  proceeds  arising  from  keeping  the  house,  and  keep  an 
account  open  for  inspection  by  the  corporation,  and  have  free  pas- 
sage over  the  railroad  for  himself  and  all  persons  employed  and  all 


TESTS  OF  PARTNERSHIP.        ,  33 

Statutory  Provisions. 

In  several  jurisdictions,  statutes  exist  expressly  declaring, 
that  persons  who  share  the  profits  of  a  business  under  one  of 
more  of  the  circumstances  just  enumerated  are  not,  for  that 
reason  alone,  partners.79  But  in  jurisdictions  where  the  re- 
articles  used  in  carrying  on  the  hotel,  did  not  thereby  become  a  part- 
ner in  the  hotel  business.  The  mere  leasing  of  a  hotel  for  a  certain 
part  of  the  net  profits  will  not  make  the  lessor  a  partner  in  the  hotel 
business.  This  was  decided  in  Beecher  v.  Bush,  45  Mich.  188,  7  N. 
W.  785.  Nor  does  the  renting  of  a  building  for  a  saloon,  under  an 
agreement  to  take  half  of  the  profits  made  out  of  the  business  done 
therein  as  rent,  make  the  renter  a  partner  in  the  business.  Thayer 
v.  Augustine,  55  Mich.  187,  20  N.  W.  898.  In  another  case,  the  plaint- 
iff contributed  towards  the  business  his  manufactory,  shops,  tools, 
implements,  and  machinery,  and  the  land  upon  which  they  were 
situated.  The  defendants  were  to  furnish  a  certain  sum  as  capital, 
and  labor  to  carry  on  the  business.  Defendants  were  to  account  to 
the  plaintiff,  at  reasonable  periods,  for  the  proceeds  of  the  business, 
or  the  profits  thereof,  and  all  daily  transactions  were  to  be  entered 
on  the  books,  to  which  plaintiff  was  to  have  excess,  and  at  stated 
periods  an  account  was  to  be  taken  of  the  profits,  which,  after  de- 
ducting the  costs  and  expenses  of  running  the  works,  and  certain 
expenses,  were  to  be  divided  between  the  parties.  It  was  held  that 
there  was  a  community  interest  in  the  capital  to  carry  on  the  busi- 
ness, and  also  a  community  of  interest  in  the  profits,  and  a  partner- 
ship was  thereby  created.  Wood  v.  Beath,  23  Wis.  254."  Webster 
v.  Clark,  34  Fla.  649,  16  So.  601.  See,  also,  May  v.  International 
Loan  &  Trust  Co.,  34  C.  C.  A.  448. 

to  In  Pennsylvania,  the  statute  provides  that  a  person  lending 
money,  and  receiving  a  share  of  the  profits  in  lieu  of  interest,  shall 
not  be  liable  to  third  persons  as  a  partner,  except  as  to  the  money 
so  loaned,  provided  the  agreement  is  in  writing,  and  he  does  not  hold 
himself  out  as  a  partner,  or  induce  credit  to  be  given  to  the  firm. 
It  is  also  provided  that  an  employee  taking  a  share  of  profits  in  lieu 
of  wages  does  not  thereby  become  a  partner,  either  really  or  as  to 
third  persons.  Pep.  &  L.  Pa.  Dig.  tit.  "Partnership,"  §§  16,  17.  As 
Cox  v.  Hickman  is  not  recognized  in  Pennsylvania,  these  statutes 
must  be  substantially  complied  with,  or  partnership  liability  will 
result. 

In  North  Carolina,  the  statute  provides  that  lessor  of  property,  re- 
3 


34  W 1 1  AT  (  <  >NSTITUTES  A  PARTNERSHIP. 

suits  of  Cox  v.  Hickman  haw  been  fully  adopted,  such  stat- 
rould  seem  to  be  bo  far  merely  declaratory  of  the  com- 
mon  Law.80 


Swii      Sn  \i.i\o  Profits  and  Losses  as  Evidence  of  In- 
tention. 

16.  This  subject  can  be  conveniently  considered  under  the 
following  heads: 

(a)  Sharing  both  profits  and  losses. 

(b)  Sharing  profits,  with  nothing  said  about  losses. 

(c)  Sharing  profits,  with  stipulation  against  losses. 

(d)  Sharing  gross  returns. 

(e)  Sharing  losses  only. 

17.  Sharing  Both  Profits  and  Losses. — An  agreement  to 
share  both  the  profits  and  the  losses  of  a  business"!? 
prima  facie,  but  not  conclusive,  evidence  of  a  partner- 
ship. 

An  agreement  to  share  both  the  profits  and  losses  of  a  busi- 
ness may  be  said  to  be  the  type  of  a  partnership  contract. 
Such  an  agreement  has  been  thought  to  be  conclusive  evidence 

ceiving  a  share  of  profits  in  lieu  of  rent,  is  not  liable  as  a  partner  of 
the  lessee.    Code  N.  C,  §  1744. 

In  England,  some  of  the  more  common  cases  were  specially  pro- 
vided for  by  Bovill's  Act  (28  &  29  Vict.  c.  86),  which,  though  re- 
pealed, is  substantially  re-enacted  by  the  partnership  act  of  1890 
(53  &  54  Vict.  c.  39).  By  the  latter  act  it  is  provided  that  persons 
■sharing  profits  of  a  business  under  the  circumstances  which  havo 
been  enumerated  in  the  text  do  not,  by  reason  only  of  such  partici- 
pation in  profits,  become  partners  in  the  business,  or  liable  as  such. 
Sellers  of  good  will,  and  lenders  of  money,  are,  however,  postponed 
to  other  creditors  in  case  of  bankruptcy. 

bo  Pollock  says  that  it  is  by  no  means  certain  that  Bovill's  Act 
really  adds  anything  material  to  what  has  already  been  decided  in 
Cox  v.  Hickman,  but  suggests  that,  whereas  Cox  v.  Hickman  decided 


TESTS  OF  PARTNERSHIP.  35 

of  a  partnership,  although  the  words  "partner"  or  "partner- 
ship" do  not  occur  in  the  agreement,81  and  certainly,  where 
such  an  agreement  has  been  proved,  the  parties  have  usually 
been  held  to  be  partners.82  But  an  agreement  to  share  profits 
and  losses  does  not  absolutely,  and  as  a  matter  of  law,  create  a 
partnership;  and,  if  other  circumstances  in  the  transaction 
show  that  the  parties  did  not  intend  (in  the  legal  sense  already 
explained)  to  create  a  partnership,  none  is  created.83 

only  that  sharing  profits  is  not  conclusive  evidence  of  partnership, 
and  leaves  it  to  be  dealt  with  as  a  question  of  fact  whether  this  is 
sufficient  evidence  in  any  case,  the  act  goes  a  step  further,  and  pre- 
vents it  from  being  alone  sufficient  in  any  of  the  classes  of  cases 
dealt  with.     Pol.  Partn.,  art.  7. 

siLindl.  Partn.,  p.  10;  Scott  v.  Campbell,  30  Ala.  728.  If  two  or 
more  persons,  without  a  special  or  express  agreement  to  form  a  part- 
nership, contribute  to  a  fund  to  be  invested,  as  occasion  offers,  in 
notes,  stocks,  and  the  like,  and  agree  to  share  the  gains  and  losses 
thereof,  they  thereby  become  partners.  Robinson  v.  Parker,  11  App. 
Cas.   (D.  C.)   132. 

82  Morse  v.  Richmond,  97  111.  303;  Smith  v.  Small,  54  Barb.  (N.  Y.) 
223;  Priest  v.  Chouteau,  12  Mo.  App.  252;  Chouteau  v.  Raitt,  20  Ohio, 
132,  144;  Getchell  v.  Foster,  106  Mass.  42;  Tyler  v.  Scott,  45  Vt.  261, 
267;  Pierce  v.  Shippee,  90  111.  371;  Kuhn  v.  Newman,  49  Iowa,  424; 
Hendy  v.  March,  75  Cal.  566;  Manhattan  Brass  &  Mfg.  Co.  v.  Sears, 
45  N.  Y.  797;  Day  v.  Stevens,  88  N.  C.  83,  43  Am.  Rep.  732.  A  con- 
tract creates  a  partnership  when  it  provides  for  a  sharing  of  profits 
and  lossess  in  a  business,  and  imposes  the  duty  of  accounting  be- 
tween the  parties.  Priest  v.  Chouteau,  12  Mo.  App.  252,  affirmed  in 
85  Mo.  398.  An  agreement  between  two  men  to  cut  and  put  up  hay 
together,  sharing  the  expenses,  losses,  and  profits,  constitutes  a  part- 
nership. Robinson  v.  Compher,  13  Colo.  App.  343,  57  Pac.  754.  In 
Wills  v.  Simmonds,  51  How.  Prac.  (N.  Y.)  48,  the  creditors  of  a 
common  debtor  agreed  to  advance  money  for  the  purpose  of  carry- 
ing on  such  debtor's  business,  the  profits  or  losses  to  be  shared  pro- 
portionately by  the  creditors.  This  was  held  to  create  a  partnership. 
Compare  this  with  the  decision  in  Cox  v.  Hickman,  8  H.  L.  Cas.  268. 

s^Grinton  v.  Strong,  148  111.  587,  36  N.  E.  559;  Leonard  v.  Sparks, 
109  La.  543;  Monroe  v.  Greenhoe,  54  Mich.  9,  19  N.  W.  569;  Osbrey 
v.  Reimer,  51  N.  Y.  630;  Dwinel  v.  Stone.  30  Me.  34S.  Burdiek's  Cases, 
17;    Snell  v.  De  Land.  43   111.  323;    Clifton  v.  Howard.   SO  Mo.  192; 


36  WHAT  CONSTITUTES  A  PARTNERSHIP. 

The  true  rule  is  thai  such  an  agreement  is  merely  prima 
\  j.lfiu  ■>  -of  a  partnership.  This  means  that,  if  all  that  is 
known  is  that  two  or  more  persons  arc  sharing  the  profits  and 
of  a  business,  the  inference  is  that  such  persons  are  part- 
ners; Inn  if  there  arc  any  circumstances  in  the  case  which 
show  thai  the  participation  in  profits  and  losses  is  upon  any 
other  basis  than  as  joint  proprietors  of  the  business,  there  is 
qo  room  for  this  inference,  and  no  partnership  is  created.84 

1 8 .  Sharing  Profits,  With  Nothing  Said  About  Losses. — 
Partnership  is  prima  facie  the  result  of  an  agreement  to 
share  profits^,  though  nothing  is  said  about  losses. 

It  has  already  been  seen  that  the  mere  fact  that  certain  per- 
sons share  the  profits  of  a  business  is  not  conclusive  evidence 
that  they  are  partners,  because,  as  is  frequently  the  case,  such 

1  S.  W.  26,  Burdick's  Cases,  88;  Newberger  v.  Friede,  23  Mo.  App. 
G31;  McPhillips  v.  Fitzgerald,  76  App.  Div.  (N.  Y.)  15;  Morgan  v. 
Stearns,  41  Vt.  398;  Moore  v.  Williams,  31  Tex.  Civ.  App.  287,  72 
S.  W.  222;  Bullen  v.  Sharp,  L.  R.  1  C.  P.  86,  125,  Burdick's  Cases,  71. 
"While  the  agreement  ...  to  share  one-half  the  profits  and 
losses  might  raise  a  presumption  of  partnership,  yet  if  the  parties 
actually  meant  that  there  was  to  be  no  partnership  created,  and  so 
contracted,  the  presumption  would  be  rebutted."  National  Surety 
Co.  v.  T.  B.  Townsend  Brick  &  Contracting  Co.,  176  111.  156,  52  N.  E. 
938,  wherein  it  was  held  that  an  agreement  between  a  contractor  and 
a  firm  in  his  employ  to  share  the  profits  and  losses  of  the  interprise 
does  not  create  a  partnership  as  between  the  parties,  where  it  is 
clear  the  arrangement  was  made  to  measure  the  compensation  of 
the  employees,  and  not  with  the  intention  of  creating  a  partnership. 
In  the  case  of  a  subpartnership,  there  is  a  sharing  of  the  profits  and 
losses  of  a  business,  and  yet,  as  has  been  seen,  the  subpartner  is  not 
?.  partner  in  the  principal  firm.     See  supra,  §§  6,  7. 

s*  Morse  v.  Richmond,  97  111.  303;  Clifton  v.  Howard,  89  Mo.  192, 
1  S.  W.  26,  Burdick's  Cases,  88;  National  Surety  Co.  v.  T.  B.  Town- 
send  Brick  &  Contracting  Co.,  176  111.  156,  52  N.  E.  938.  It  is  merely 
'a  presumption  of  law  which  prevails  in  the  absence  of  controlling 
circumstances.  Pierpont  v.  Lamphere,  140  111.  App.  232;  Johnson  v. 
Carter,  120  Iowa,  355,  94  N.  W.  850. 


TESTS  OF  PARTNERSHIP.  37 

profits  may  be  shared  on  some  other  basis  than  as  common 
owners  or  joint  proprietors  of  such  profits.  But  where  all 
that  is  known  is  that  several  persons  are  sharing  the  profits 
of  a  business,  the  most  natural  inference  is  that  they  share  the 
profits  because  they  jointly  own  them.  Accordingly,  proof 
of  a  participation  in  the  profits  of  a  business  raises  a  prima 
facie  presumption  of  the  existence  of  a  partnership.85  This 
presumption  is  not  conclusive,  but  may  be  overthrown  by  proof 
of  other  circumstances,  showing  that  the  profits  are  shared  on 
some  other  basis  than  as  common  owners,86  for  example,  in 

ssPooley  v.  Driver,  5  Ch.  Div.  458;  Meehan  v.  Valentine,  145  U.  S. 
€11,  Burdick's  Cases,  80,  Mechem's  Cases,  103;  Parchen  v.  Anderson, 
5  Mont.  438,  51  Am.  Rep.  65;  Parker  v.  Canfield,  37  Conn.  250;  Fourth 
Nat.  Bank  v.  Altheimer,  91  Mo.  190,  3  S.  W.  858;  Lengle  v.  Smith, 
48  Mo.  276;  Lockwood  v.  Doane,  107  111.  235;  Ryder  v.  Wilcox,  103 
Mass.  24,  Burdick's  Cases,  525;  In  re  Gibb's  Estate,  157  Pa.  59,  27 
Atl.  383;  Glore  v.  Dawson,  106  Mo.  App.  107,  80  S.  W.  55;  Fechteler 
v.  Palm  Bros.  &  Co.  (C.  C.  A.),  133  Fed.  462.  Participation  in  the 
profits  of  a  business  is  prima  facie  strong  evidence  of  a  partnership 
in  it.  And  this  rule  apples  to  a  party  who  receives  a  sum  equal  to 
a  certain  share  of  the  profits,  as  well  as  to  a  party  receiving  such 
share  of  profits  by  the  name  of  profits.  Parker  v.  Canfield,  37  Conn. 
250. 

se  Wild  v.  Davenport,  48  N.  J.  Law,  129,  7  Atl.  295,  Burdick's  Cases, 
77;  Lockwood  v.  Doane,  107  111.  235;  Waggoner  v.  First  Nat.  Bank, 
43  Neb.  84,  61  N.  W.  112;  In  re  Gibb's  Estate,  157  Pa.  59,  27  Atl.  383. 
See,  also,  ante,  §  10.  Under  the  doctrine  prevailing  before  the  decis- 
ion of  Cox  v.  Hickman,  profit  sharing  was  conclusive  proof  of  a  part- 
nership, at  least  as  to  third  persons.  See  ante,  §  9.  But  see  Parker 
v.  Canfield,  37  Conn.  250,  commenting  on  effect  of  decisions  before 
Cox  v.  Hickman. 

"It  it  said  (and  about  that  there  is  no  doubt)  that  the  mere  par- 
ticipation in  profits  inter  se  affords  cogent  evidence  of  partnership. 
But  it  is  now  settled  by  the  cases  of  Cox  v.  Hickman,  8  H.  L.  Cas. 
268,  Burdick's  Cases,  65;  Bullen  v.  Sharp,  L.  R.  1  C.  P.  86.  and 
Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  419,  that  although  a  right  to 
participate  in  profits  is  a  strong  test  of  partnership,  and  there  may 
be  cases  where,  upon  a  simple  participation  in  profits,  there  is  a  pre- 
sumption, not  of  law,  but  of  fact,  that  there  is  a  partnership,  yet 
whether  the  relation  of  partnership  does  or  does  not  exist  must  de- 


3S  WHAT  CONSTITUTES  A  PARTNERSHIP. 

lieu  of  wages  for  services,  rein  of  property,  interest  on  money, 
and  the  like.87  Ilul  in  the  absence  <if  any  such  explanation  as 
to  the  basis  upon  which  the  profits  are  shared,  mere  proof  of 
profit-sharing  is  sufficient  to  establish  the  fact  of  partner- 
ship.88 Where  there  is  nnthina:  to  show  a  contrary  intention, 
it  will  be  presumed  that  losses  were  to  be  shared  in  the  same 
proportion  as  the  profits,  and  the  case  falls  within  the  rule  that 
an  agreement  to  share  both  the  profits  and  losses  of  a  business 
is  prima  facie  evidence  of  a  partnership.89    . 

pend  upon  the  whole  contract  between  the  parties,  and  that  circum- 
stance is  not  conclusive."    Ross  v.  Parkyns,  L.  R.  20  Eq.  335. 

"  See  ante,  §  10. 

ssLockwood  v.  Doane.  107  111.  235;  Ryder  v.  Wilcox,  103  Mass.  24, 
Burdick's  Cases,  525;  Cothran  v.  Marmaduke,  60  Tex.  370;  Fourth 
Nat.  Bank  v.  Althemier,  91  Mo.  190,  3  S.  W.  858;  Meehan  v.  Valentine, 
145  U.  S.  611,  Burdick's  Cases,  80,  Mechem's  Cases,  103.  See,  also, 
cases  cited  supra  in  this  section. 

89  Oppenheimer  v.  Clemmons,  18  Fed.  886;  Richards  v.  Grinnell, 
63  Iowa,  44,  18  N.  W.  668;  Johnson  v.  Carter,  120  Iowa,  355,  94  N.  W. 
850;  Illingworth  v.  Parker,  62  111.  App.  650;  Jones  v.  Murphy,  93  Va. 
214.  24  S.  E.  825;  Cothran  v.  Marmaduke.  60  Tex.  370;  Lengle  v. 
Smith,  48  Mo.  276;  Wilcox  v.  Dodge,  12  111.  App.  517.  Where  two 
persons  engage  in  a  joint  venture — one  to  furnish  capital,  and  the 
other  skill  and  labor,  and  both  to  share  the  profits — it  is  a  partner- 
ship, though  there  is  no  agreement  as  to  sharing  losses;  the  law  pre- 
suming such  agreement.  Dow  v.  Dempsey,  21  Wash.  86,  57  Pac.  355. 
"An  agreement  between  two  or  more  parties  to  engage  jointly  in 
the  business  of  supplying  a  government  post  might  constitute  a 
"partnership,"  although  the  term  were  not  used,  nor  any  express 
mention  made,  in  regard  to  profits  or  losses.  If  it  were  understood 
between  the  parties  that  there  was  to  be  a  communion  of  profit,  it 
would  be  a  partnership.  'A  communion  of  profit  implies  a  com- 
munion of  loss;  for  every  man  who  has  a  share  of  profits  of  a  trade 
ought  also  to  bear  his  share  of  the  loss.' "  Bloomfield  v.  Buchanan, 
13  Or.  108,  8  Pac.  912.  It  is  not  necessary  that  there  should  be  an 
express  stipulation  to  share  profit  and  loss  in  order  to  constitute  a 
partnership.  If  it  were  understood  between  the  parties  that  there 
was  to  be  a  communion  of  profit,  that  would  be  a  partnership.  Bloom- 
field  v.  Buchanan,  13  Or.  108,  8  Pac.  912;  Manhattan  Brass  &  Mfg. 
Co.  v.  Sears,  45  N.  Y.  797.    In  Iowa,  it  is  held  that  a  contract  which 


TESTS  OF  PARTNERSHIP.  39 

19.  Sharing  Profits,  With  Stipulation  Against  Losses. — 
Partnership  is  prima  facie  the  result  of  an  agreement  to 
share  profits,  although  community  of  loss  is  stipulated 
against. 

Persons  who  agree  to  share  the  profits  of  a  business  are 
prima  facie  partners,  although  they  stipulate  that  they  will 
not  be  liable  for  losses  beyond  the  sum  which  they  engaged  to 
subscribe.90  It  has  been  said  that,  in  order  to  constitute  a 
partnership,  a  community  of  both  profits  and  losses  is  essen- 
tial.91 But  there  appears  to  be  nothing  to  prevent  one  or 
more  partners  from  agreeing  to  indemnify  the  others  against 
loss,  or  to  prevent  full  effect  from  being  given  to  a  contract  of 
IDartnersliip  containing  such  a  clause  of  indemnity.92     Lind- 

does  not  provide  for  a  sharing  of  losses,  as  well  as  profits,  does  not 
create  a  partnership.  Winter  v.  Pipher,  96  Iowa,  17,  64  N.  W.  663, 
Burdick's  Cases,  90;  McBride  v.  Ricketts,  98  Iowa,  539,  67  N.  W.  410. 
But  compare  Richards  v.  Grinnell,  supra. 

00  Walden  v.  Sherburne,  15  Johns.  (N.  Y.)  409;  Pollard  v.  Stanton, 
7  Ala.  761;  Clift  v.  Barrow,  108  N.  Y.  187,  15  N.  E.  327,  Burdick's 
Cases,  93.  A  partnership  may  exist,  though  one  partner  guaranties 
that  the  profits  of  the  other  partner  shall  amount  to  a  certain  sum. 
Robbins  v.  Laswell,  27  111.  365.  If  parties  agree  to  share  profits,  they 
are  partners  as  to  such  profits,  although  they  do  not  agree  to  share 
in  losses.     Id. 

93  Mayrant  v.  Marston,  67  Ala.  453;  Whitehill  v.  Shickle,  43  Mo. 
537;  Ruddick  v.  Otis,  33  Iowa,  402;  Coope  v.  Eyre,  1  H.  Bl.  37, 
Mechem's  Cases,  64;  Winter  v.  Pipher,  96  Iowa,  17,  64  N.  W.  663; 
McBride  v.  Ricketts,  98  Iowa,  539,  67  N.  W.  410;  Pattison  v.  Blanch- 
ard,  5  N.  Y.  186;  Vanderburgh  v.  Hull,  20  Wend.  (N.  Y.)  70;  Cum- 
mings  v.  Mills,  1  Daly  (N.  Y.)  520.  "It  is  well  settled  in  this  state 
that  a  mere  participation  in  the  profits  of  a  business  does  not  con- 
stitute a  partnership  as  between  the  parties.  There  must  be  a  shar- 
ing of  the  losses."  Porter  v.  Curtis,  96  Iowa,  539,  65  N.  W.  824,  cit- 
ing Price  v.  Alexander,  2  G.  Greene  (Iowa)  431;  Williams  v.  Soutter, 
7  Iowa,  445;  Munson  v.  Sears,  12  Iowa,  178;  Holbrook  v.  Oberne,  56 
fowa,  324,  9  N.  W.  291;  Winter  v.  Pipher,  96  Iowa,  17,  64  N.  W.  663. 

■'-  Oppenheimer  v.  Clemmons,  18  Fed.  888;  Bond  v.  Pittard,  3  Mees 
&  W.  357;  Gilpin  v.  Enderbey,  5  Barn.  &  Aid.  954;  Fereday  v.  Hor- 
dern,  Jac.  144.     Sharing  the  losses  of  adventure  is  not  essential  to 


4i |  WB  AT  CONSTITUTES  A  PARTNERSHIP.} 

ley  says  thai  the  true  effect  of  such  a  stipulation  is  to  entitle 
some  of  the  partners  to  indemnity  against  losses  in  excess  of 
the  advances,  but  not  against  loss  of  the  advances  themselves, 
ami  that,  if  the  loss  of  the  advances  is  stipulated  against,  the 
contract  becomes  one  of  loan,  and  not  of  partnership.93  It 
is  often  a  very  difficult  matter  to  determine  whether  a  person 
advancing  money  and  sharing  profits  is  to  be  considered  a 
creditor  or  a  partner.  This  can  only  be  decided  by  a  careful 
study  of  the  whole  agreement,  with  especial  reference  to  what 
rights  are  conferred  upon  or  taken  from  the  person  making  the 
advances.94  Thus,  if,  in  addition  to  a  right  to  an  account 
and  an  inspection  of  the  books  of  the  borrower,  the  person 
making  the  advances  reserves  a  right  to  control  the  business 
or  the  employment  of  the  assets,  or  to  wind  up  the  business, 
he  ceases  to  be  a  mere  lender,  and  becomes,  in  effect,  a  part- 
ner.95    A  partner  who  has  stipulated  against  any  personal 

a  copartnership.  If  there  is  a  community  of  interests  in  the  profits, 
as  such,  of  the  husiness,  and  not  by  way  of  compensation  for  serv- 
ices rendered  or  capital  loaned  toward  the  prosecution  of  the  busi- 
ness, it  is  sufficient  to  constitute  a  partnership.  Waggoner  v.  First 
Nat.  Bank,  43  Neb.  84,  61  N.  W.  112. 

ss  Lindl.  Partn.  p.  15.  Orvis  v.  Curtiss,  12  Misc.  434,  33  N.  Y.  Supp. 
589,  but  this  case  was  reversed,  and  the  contrary  was  squarely  held, 
in  157  N.  Y.  657. 

o-*  See  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  419;  Pooley  v. 
Driver,  5  Ch.  Div.  458;  Badeley  v.  Consolidated  Bank,  34  Ch.  Div. 
536. 

»b  Lindl.  Partn.  p.  17;  Orvis  v.  Curtiss,  12  Misc.  434,  157  N.  Y.  657, 
33  N.  Y.  Supp.  589;  Magovern  v.  Robertson,  116  N.  Y.  61,  Mechem's 
Cases,  122;  Hackett  v.  Stanley,  115  N.  Y.  625,  14  Daly  (N.  Y.)  210, 
22  N.  E.  745,  Burdick's  Cases,  57;  Leggett  v.  Hyde,  58  N.  Y.  272,  Bur- 
dick's  Cases,  50;  Rosenfield  v.  Haight,  53  Wis.  260,  10  N.  W.  378; 
Spaulding  v.  Stubbings,  86  Wis.  255,  56  N.  W.  469,  Mechem's  Cases, 
117;  Waverly  Nat.  Bank  v.  Hall,  150  Pa.  466,  24  Atl.  665;  Voorhees 
v.  Jones,  29  N.  J.  Law,  270.  Community  of  interest  in  profits,  not 
by  way  of  compensation  for  services  rendered  or  capital  loaned,  but 
profits,  as  such,  a  community  of  interest  in  the  property  the  subject 
of  the  venture,  and  a  community  of  power  of  management  of  such 


Ai^v_  ^/*m*^  •  ^r*^~ 


TESTS  OF  PARTNERSHIP.  41 

liability  lias  been  held  not  liable  to  one  who  deals  with  the 
firm  with  notice  of  such  limitation  upon  his  liability;  °6  but 
the  better  opinion  would  seem  to  be  that  all  are  primarily 
liable  to  a  third  person,  because  all  are  partners,  and  that  the 
partner  must  seek  his  indemnity  from  his  copartners.97 

20.     Sharing  Gross  Returns. — PajJjiei^hipJ^-aQjtUhe^^l^t 
of  an  agrennfnt  tn  ihnrf  grflfifi  reruns 

TUinaJnjig  h^rni  afttjjftjjhat  an  agreement  to  share  gross  re- 
fnmHrvf  a  joint  vp.nt.nre  oWs  not  create  a  partnership.98  Even 
underthe  old  doctrine  that  persons  who  shared  profits  were 

property,  are  correct  tests  of  partnership.  Waggoner  v.  First  Nat. 
Bank,  43  Neb.  84,  61  N.  W.  112. 

»G  Bailey  v.  Clark,  6  Pick.  (Mass.)   372. 

97  Pollard  v.  Stanton,  7  Ala.  761;  Clift  v.  Barrow,  108  N.  Y.  187, 
15  N.  E.  327;  Everitt  v.  Chapman,  6  Conn.  347;  Brown  v.  Leonard,  2 
Chit.  120;  Walden  v.  Sherburne,  15  John.  (N.  Y.)  409;  Lindl.  Partn. 
p.  41;  Bond  v.  Pittard,  3  Mees  &  W.  357;  Fereday  v.  Hordern,  Jac. 
144;  Vocrhees  v.  Jones,  29  N.  J.  Law,  270.  "One  partner  may  ex- 
pressly stipulate  that  he  is  not  to  share  in  losses,  and  such  an  agree- 
ment will  be  valid  between  the  parties,  but  he  cannot  thus  withdraw 
himself  from  his  obligation,  as  a  partner,  to  strangers."  Oppen- 
heimer  v.  Clemmons,  18  Fed.  888. 

as  Blue  v.  Leathers,  15  111.  31;  Beecher  v.  Bush,  45  Mich.  188,  7 
N.  W.  785;  Merrick  v.  Gordon,  20  N.  Y.  93;  Champion  v.  Bostwick, 
18  Wend.  (N.  Y.)  175;  Everett  v.  Coe,  5  Denio  (N.  Y.)  180;  Heini- 
street  v.  Howland,  5  Denio  (N.  Y.)  68;  Pattison  v.  Blanchard,  5 
N.  Y.  186;  Putnam. v.  Wise,  1  Hill  (N.  Y.)  234;  Day  v.  Stevens,  88 
N.  C.  83,  43  Am.  Rep.  732;  Brown  v.  Jaquette,  94  Pa.  113,  39  Am. 
Rep.  770;  Ambler  v.  Bradley,  6  Vt.  119;  Cedarburg  v.  Guernsey,  12 
S.  D.  77,  80  N.  W.  159;  Mason  v..  Potter,  26  Vt.  722;  Oppenheimer  v. 
Clemmons,  18  Fed.  886;  Benjamin  v.  Porteus,  2  H.  Bl.  590;  Dry  v. 
Boswell,  1  Camp.  330;  Mair  v.  Glennie,  4  Maule  &  S.  240;  Wilkin- 
son v.  Frasier,  4  Esp.  182;  Heyhoe  v.  Burge,  9  C.  B.  431;  Eastman 
v.  Clark,  53  N.  H.  276.  Contra,  Jones  v.  McMichael,  12  Rich.  (S.  C.) 
176;  Allen  v.  Davis,  13  Ark.  28;  Holifield  v.  White,  52  Ga.  567; 
Adams  v.  Carter,  53  Ga.  160.  A  contract  that  a  person  furnishing 
logs  to  a  saw  mill  shall  receive  as  compensation  therefor,  either  one- 
half  of  the  lumber  made  from  the  logs,  or  a  stipulated  price  per 


tL.  WHAT  CONSTITUTES  A  PARTNRSHIP. 

liable  to  third  persons  as  it'  they  wore  partners,  it  was  held 
that  persons  who  merely  divided  gross  returns  did  not  incur 
any  Buch  liabilities."  In  this  connection,  the  term  "gross 
profits,"  sometimes  me1  with  m  the  books,  is  used  synonym- 
ously  with  "gross  returns."  10° 

The  pea]  reason  why  an  agreement  to  share  the  gross  re- 
turns dec-  ix. i  create  a  partnership  is  that  such  an  agreement 
cannot  possibly  constitute  the  parties  thereto  joint  proprietors 

hundred  feet  for  such  half,  does  not  create  a  partnership,  for  such 
person  has  no  interest,  either  in  the  profits  or  losses  of  the  busi- 
ness. Thornton  v.  George,  108  Ga.  9,  33  S.  E.  633.  To  same  effect 
is  Parker  v.  Fergus,  43  111.  437. 

99  See  cases  cited  in  preceding  note.  Speaking  of  the  distinction 
between  agreements  to  share  profits  and  agreements  to  share  gross 
returns,  Lindley  says  (page  9):  "The  reasonableness,  however,  of 
the  above  distinction,  is  very  questionable,  at  least  where  there  is 
any  community  of  capital  or  common  stock;  and  the  rule  itself  is 
probably  attributable  less  to  the  difference  which  exists  between  net 
profits  and  gross  returns  than  to  the  doctrine  which  so  long  con- 
fused the  whole  law  of  partnership  in  this  country,  and  according 
to  which  all  persons  who  shared  profits  incurred  liability  as  if 
they  were  really  partners.  When  this  doctrine  was  rife,  the  dis- 
tinction between  sharing  net  profits  and  gross  profits  (i.  e.,  returns) 
had  considerable  practical  value;  but,  as  will  be  seen  hereafter,  the 
doctrine  in  question  is  now  wholly  exploded,  and  the  distinction  al- 
luded to  is  of  little  importance." 

"Whether  a  man  is  a  partner  or  not  depends  upon  the  nature  of 
his  interest  in  the  profits.  The  profits  of  a  trade  are  included  with- 
in the  gross  proceeds,  and,  if  a  man  is  interested  as  owner  in  the 
latter  of  these  funds,  he  must  be  also  in  the  former;  for  there  is 
nothing  in  the  mere  deduction  in  the  expenses  of  the  business  from 
its  proceeds  which  affects,  in  any  way,  the  kind  of  interest  of  those 
concerned  therein.  Hence,  the  question  still  must  be,  not  whether 
a  man  share  in  gross  or  in  net  receipts,  but  what  is  the  nature  of 
his  interest  in  either  of  these  funds?  If  his  interest  is  that  of 
owner,  then  he  is  a  partner;  otherwise  not."  Wheeler  v.  Farmer. 
38  Cal.  205. 

ioo  Profits  are  the  excess  of  returns  over  advances.  Therefore  the 
terms  "profits,"  "net  profits,"  and  "net  returns"  are  all  synonymous. 
The  term  "gross  profits"  is  inaccurate.  "Gross  returns"  is  what  is 
meant.     See  Lindl.  Partn.  p.  7. 


TESTS  OF  PARTNERSHIP.  43 

of  the  profits,  which  has  been  seen  to  be  the  one  essential  ele- 
ment of  every  true  partnership.  Snch  an  agreement  creates 
merely  a  debt  between  the  parties,  for  the  share  may  be 
claimed,  even  where  there  are  no  profits,  but  a  loss  instead. 
"Though  the  sum  may  come  out  of  profits,  if  they  are  suffi- 
cient, it  will  nevertheless  come  out  of  somebody,  though  there 
be  no  profits.  The  fixed  amount,  which  is  independent  of  the 
success  or  failure  of  the  business,  betrays  a  stranger's  interest, 
and  not  a  principal's."  101  Where,  however,  there  is  a  joint 
business  or  common  stock  or  capital,  and  a  division  of  the 
product  in  kind,  it  has  been  held  that  a  partnership  is 
created.102 

Illustrations  of  Rule. 

Perhaps  the  strongest  illustration  of  the  rule  under  consid- 
eration is  afforded  by  those  cases  where  co-owners  of  chattels 
agree  to  divide  the  earnings  obtained  by  the  use  or  employ- 
ment thereof.  Such  an  agreement  does  not  constitute  the  co- 
owners  partners.103     "Where  two  persons  bought  a  circus,  and 

101  J.  Pars.  Partn.  §  62.  This  excellent  little  book  is  not  so  widely 
known  as  its  merits  deserve.  See,  also,  Everett  v.  Coe,  5  Denio 
(N.  Y.)  180. 

io2Everitt  v.  Chapman,  6  Conn.  347;  Jones  v.  McMichael,  12  Rich. 
(S.  C.)  176;  Stapleton  v.  King,  33  Iowa,  28,  11  Am.  Rep.  109;  Musier 
v.  Trumpbour,  5  Wend.   (N.  Y.)  274. 

103  in  French  v.  Styrnig,  2  C.  B.  (N.  S.)  357,  Ames'  Cas.  Partn.  41, 
the  plaintiff  and  defendant  were  the  common  owners  of  a  race  horse. 
It  was  agreed  that  the  plaintiff  should  keep,  train  and  have  the 
management  of  the  horse;  that  thirty-five  shillings  a  week  should 
be  allowed  for  the  expenses  of  his  keep;  that  the  plaintiff  should 
pay  the  expenses  of  entering  the  horse,  'and  conveying  him  to  the 
different  races;  and  that  one-half  of  the  horse's  keep  and  other  ex- 
penses and  his  winnings  should  be  equally  divided  between  the 
plaintiff  and  the  defendant.  This  agreement  was  held  not  to  create 
a  partnership.  It  was  said  to  be  no  more  a  partnership  than  if  two 
tenants  in  common  of  a  house  had  agreed  that  one  of  them  should 
have  the  general  management,  and  provide  funds  for  necessary  re- 
pairs, and  that  the  net  rent  should  be  divided  between  them  equally. 


44  WHAT  CONSTITUTES  A  PARTNERSHIP. 

one  agreed  to  manage  it,  and  divide  the  gross  receipts  with  the 
other,  no  partnership  was  created.104  A  lessor  of  property  for 
a  proportion  of  the  gross  receipts  is  not  a  partner  of  the 
Lessee.108  So,  where  two  persons  were  respectively  the  lessee 
and  manager  of  a  theater,  and  they  shared  the  gross  receipts 
equally,  the  manager  paying  the  expenses  out  of  his  share,  it 
was  held  that  no  partnership  subsisted.100  The  cultivation  of 
land  for  a  share  of  the  crops  is  not  a  partnership.107  The 
crew  of  a  whaling  ship,  who  are  to  be  paid  by  the  owners  a 
certain  share  of  the  oil  brought  home,  are  not  partners  with 
the  owners. 10s  A  retiring  partner,  receiving,  for  his  interest, 
a  percentage  upon  the  gross  future  sales  of  the  firm,  is  not  a 
partner  in  the  new  firm.109  ISTo  partnership  exists  between 
the  owner  of  a  barge  and  a  man  who  works  it,  and  receives  for 
his  wages  half  the  gross  earnings.110     A  contract  to  keep  stock 

lo-t  Quackenbush  v.  Sawyer,  54  Cal.  439,  Burdick's  Cases,  25. 

105  Beecher  v.  Bush,  45  Mich.  188,  7  N.  W.  785,  Mechem's  Cases,  86; 
Heimstreet  v.  Howland,  5  Denio  (N.  Y.)  68;  Knowlton  v.  Reed,  38 
Me.  246. 

ioo  Lyon  v.  Knowles,  3  Best  &  S.  556. 

loiTayloe  v.  Bush,  75  Ala.  432;  Gurr  v.  Martin,  73  Ga.  528;  Blue 
v.  Leathers,  15  111.  31;  Putnam  v.  Wise,  1  Hill  (N.  Y.)  234;  Mann 
v.  Taylor,  5  Heisk.  (Tenn.)  267;  Brown  v.  Jaquette,  94  Pa.  113. 
Contra,  Allen  v.  Davis,  13  Ark.  28;  Holifield  v.  White,  52  Ga.  567; 
Adams  v.  Carter,  53  Ga.  160.  Where  the  landlord  furnishes  the  land 
and  teams  and  feed  for  them,  and  the  tenant  supplies  the  labor  and 
provisions  for  the  laborers,  in  the  cultivation  of  a  crop,  the  gross 
product  to  be  divided  between  them,  without  any  account  of  ex- 
penditures made  by  either,  the  agreement  does  not  constitute  an 
agricultural  partnership.  Day  v.  Stevens,  88  N.  C.  83;  Parker  v. 
Fergus,  43  111.  437.  But  an  agreement  to  carry  on  a  farm,  one  fur- 
nishing the  land,  outfit  and  necessary  money,  the  other  furnishing 
laborers  and  superintending,  half  the  money  furnished  to  be  re- 
paid, and  the  profits  to  be  divided  between  them,  constitutes  a  part- 
nership. Reynolds  v.  Pool,  84  N.  C.  37,  37  Am.  Rep.  607,  Burdick's 
Cases,  30. 

los  Wilkinson  v.  Frasier,  4  Esp.  182;  Holden  v.  French,  68  Me.  241. 

i"!' Gibson  v.  Stone,  43  Barb.  (N.  Y.)   285. 

no  Dry  v.  Boswell,  1  Camp.  330.  See,  also,  Lowery  v.  Brooks,  2  Mc- 
Cord  (S.  C.)   421. 


TESTS  OF  PARTNERSHIP.  -  45 

for  a  share  of  the  increase  does  not  create  a  partnership.111 
Where  connecting  carriers  have  associated  themselves  under  a 
contract  for  a  division  of  the  profits  of  the  carriage  in  certain 
proportions,  or  of  the  receipts  from  it  after  deducting  any  of 
the  expenses  of  the  business,  they  become  jointly  liable  as 
partners  to  third  persons ;  but  where  the  agreement  is  that 
each  shall  bear  the  expenses  of  his  own  routes,  and  that  the 
gross  receipts  shall  be  divided  in  proportion  to  distance,  or 
otherwise,  they  are  partners  neither  inter  se  nor  as  to  third 
persons,  and  incur  no  joint  liability.112 

21.     Sharing  Losses  Only. — Partnership  is  not  the  result  of 
an  agreement  to  share  losses  or  expenses  only. 

Where  there  is  an  agreement  to  share  losses,  but  no  agree- 
ment, express  or  implied,  to  share  profits,  no  partnership  is 
created.  This  is  necessarily  so,  for,  as  has  been  seen,  a  com- 
munity of  ownership  in  the  profits  is  the  very  essence  of  a 
partnership.113  Where  the  enterprise  is  not  undertaken  for 
profit,  there  is  no  partnership.114  Thus,  where  two  connect- 
ing carriers  agreed  to  bear  jointly  all  losses  to  persons  or  goods 

in  Beckwith  v.  Talbot,  95  U.  S.  289;  Robinson  v.  Haas,  40  Cal.  474. 

112  Hutch.  Car.  (2d.  Ed.)  §  169;  Hale,  Bailm.  &  Carr.  pp.  473-475; 
Bostwick  v.  Champion,  11  Wend.  (N.  Y.)  571,  18  Wend.  (N.  Y.) 
175;  Block  v.  Fitchburg  R.  Co.,  139  Mass.  308,  1  N.  E.  348;  Gass  v. 
New  York  P.  &  B.  R.  Co.,  99  Mass.  220;  Merrick  v.  Gordon,  20  N.  Y. 
93;  Briggs  v.  Vanderbilt,  19  Barb.  (N.  Y.)  222;  Insurance  Co.  v. 
Railroad  Co.,  104  U.  S.  146;  Post  v.  Southern  R.  Co.,  103  Tenn.  184r 
52  S.  W.  301,  55  L.  R.  A.  481. 

us  Jones  v.  Howard,  53  Miss.  707;  Moss  v.  Jerome,  10  Bosw. 
(N.  Y.)  220;  Alabama  Fertilizer  Co.  v.  Reynolds,  79  Ala.  497;  Irvia 
\.  Nashville,  C.  &  St.  L.  R.  Co.,  92  111.  103,  34  Am.  Rep.  116.  But 
see  Hendrick  v.  Gunn,  35  Ga.  234. 

in  Thus,  an  arrangement  between  B.  and  C.  for  "mutually  keep- 
ing house,"  by  which  C.  is  to  pay  the  house  rent  and  the  butcher's 
bill,  and  B.  is  to  pay  the  other  bills  for  the  family  expenses,  does 
not,  as  a  matter  of  law,  make  B.  and  C.  partners,  or  authorize  C.  to 
bind  B.  to  third  parties  for  the  rent.  Austin  v.  Thomson,  45  N.  H. 
113. 


i  - 


4f,  WHAT  CONSTITUTES  A  PARTNERSHIP. 

qoI  traceable  to  either  alone,  they  were  not  thereby  made  part- 
ners.115 So,  where  the  joint  owners  of  a  horse  agree  that  one 
of  them  >li;ill  keep  it,  the  expense  of  so  doing  to  be  shared  by 
both,  no  partnership  is  created.116  Persons  who  have  agreed 
to  share  the  costs  of  a  lest  case  in  eon  rt  are  not  partners.117 


Same — Common  Stock  ok  Capital. 

22.  A  community  of  interest  in  the  stock  or  capital,  by 
means  of  which  profits  are  earned,  is  not  essential  to  the 
existence  of  a  partnership. 

Jj^s^jiotessential  to  the  existence  of  a  partnership  thai. 
1 1 1  «■  ic  shairBejny  joint  capitadoT'sTfick.  If  several  persons 
labor  together  for  the  sake  of  profit,  and  dividing  that  profit, 
they  will  not  be  any  less  partners  because  they  labor  with  their 
own  tools  or  property.118  A  partnership  may  exist  between 
persons,  one  of  whom  furnishes  all  the  capital,  and  the  other 

uslrvin  v.  Nashville,  C.  &  St.  L.  Ry.  Co.,  92  111.  103;  Aigen  v. 
Boston  &  M.  Railroad,  132  Mass.  423. 

"6  Oliver  v.  Gray,  4  Ark.  425,  Burdick's  Cases,  16. 

ii7  Carter  v.  Carter,  28  111.  App.  340. 

i^Lindl.  Partn.  p.  13,  citing  Fromont  v.  Coupland,  2  Bing.  170, 
wherein  two  persons  who  horsed  a  coach,  and  divided  the  profits, 
were  held  to  be  partners,  although  each  found  his  own  horses,  and 
the  other  had  no  property  in  them.  See,  also,  Meyer  v.  Sharpe,  5 
Taunt.  74;  Smith  v.  Watson,  2  Barn.  &  C.  401;  Gardiner  v.  Childs,  8 
Car.  &  P.  345;  Stevens  v.  Faucet,  24  III.  483,  and  cases  cited  infra, 
this  section.  "It  is  not  necessary  to  constitute  a  partnership,  that 
there  should  be  any  property  constituting  the  capital  stock  which 
shall  be  jointly  owned  by  the  partners;  but  the  capital  may  consist 
in  the  mere  use  of  property  owned  by  the  individual  partners  sepa- 
rately, and  it  is  sufficient  to  constitute  the  relation  that  they  have 
agreed  to  share  the  profits  and  losses  arising  from  the  use  of  prop- 
erty or  skill,  either  separately  or  combined."  Bigelow  v.  Elliot,  1 
Cliff.  36.  See,  also,  Oppenheimer  v.  Clemmons,  18  Fed.  888  Fed  Cas. 
No.  1,399. 


TESTS  OF  PARTNERSHIP.  47 

merely  services,  the  profits  only  being  shared.119  But  where 
a  person  is  sharing  the  profits  of  a  business,  the  fact  that  he 
has  an  interest  in  the  capital  or  stock  is  a  circumstance  tend- 
ing strongly  to  show  that  he  is  a  joint  proprietor  of  the  busi- 
ness and  its  profits,  and  therefore  a  partner, — in  fact,  the  con- 
-elusion  of  partnership  is  almost  irresistible.120 

no  Bucknam  v.  Barnuna,  15  Conn.  67;  Robbins  v.  Laswell,  27  111. 
365;  Lockwood  v.  Boane,  107  111.  235;  Pierce  v.  Shippee,  90  111.  371; 
Kuhn  v.  Newman,  49  Iowa,  424;  Ryder  v.  Wilcox,  103  Mass.  24,  Bur- 
dick's  Cases,  525;  Mulhall  v.  Cheatham,  1  Mo.  App.  476;  Ruckman 
v.  Decker,  23  N.  J.  Eq.  283;  Hayes  v.  Vogel,  14  Daly  (N.  Y.)  486; 
Pooley  v.  Driver,  5  Ch.  Div.  458.  "Whether  each  contributes  money 
or  labor,  or  both  money  and  labor,  or  as  in  the  present  case,  one 
finds  money,  and  the  other  labor,  still  it  is  equally  a  partnership." 
Miller  v.  Hughes,  1  A.  K.  Marsh.  (Ky.)  182.  "The  contract  provides 
that  plaintiff  shall  furnish  the  goods,  and  the  defendant  his  time, 
and  the  profits  and  losses  are  to  be  shared  equally.  This  is  a  very 
common  and  usual  contract  of  partnership,  and  it  must  be  held,  we 
think,  that  these  persons  were  partners,  unless  there  is  some  other 
provision  of  the  contract,  of  a  controlling  nature,  which  changes 
what  is  regarded  as  the  established  rule."  Kuhn  v.  Newman,  49 
Iowa,  428. 

1-"  Webster  v.  Clark,  34  Fla.  637;  Sankey  v.  Columbus  Iron  Works, 
44  Ga.  228;  Morse  v.  Richmond,  97  111.  303;  Richards  v.  Grinnell,  63 
Iowa,  44,  18  N.  W.  668;  Somerby  v.  Buntin,  118  Mass.  279;  Bohrer  v. 
Drake,  33  Minn.  408,  23  N.  W.  840;  Chase  v.  Barrett,  4  Paige,  Ch. 
(N.  Y.)  148;  Hackett  v.  Stanley,  115  N.  Y.  625,  22  N.  E.  745,  Bur- 
dick's  Cases,  57;  Magovern  v.  Robertson,  116  N.  Y.  61,  22  N.  E.  398, 
Mechem's  Cases,  122;  Mumford  v.  Nicholl,  20  Johns.  (N.  Y.)  611; 
Sawyer  v.  First  Nat.  Bank,  114  N.  C.  13,  18  S.  E.  949;  Hulett  v.  Fair- 
banks, 40  Ohio  St.  233;  Credit  Mobilier  v.  Com.,  67  Pa.  233;  Jones  v. 
McMichael,  12  Rich.  (S.  C.)  176;  Cothran  v.  Marmaduke,  60  Tex. 
370;  Spaulding  v.  Stubbings,  86  Wis.  255,  56  N.  W.  469,  Mechem's 
Cases,  117;  Meehan  v.  Valentine,  145  U.  S.  611,  Burdick's  Cases,  80, 
Mechem's  Cases,  103;  Ward  v.  Thompson,  22  How.  (U.  S.)  330. 
"Where"  it  appears  that  there  is  a  community  of  interest  in  the  cap- 
ital stock,  and  also  a  community  of  interest  in  the  profit  and  loss, 
then  it  is  clear  that  an  actual  partnership  exists  between  the  par- 
ties." Flower  v.  Barnekoff.  20  Or.  132,  25  Pac.  370.  Where  one  party 
holds  title  to  all  the  property  used  in  the  conduct  of  a  business  and 
Las  the  exclusive  possession  and  control  of  both  the  property  and  the 


4S  WHAT  CONSTITUTES  A  PARTNERSHIP. 


Questions  of  Law  and  Fact. 

23.    -The  existence  of  a  partnership  is  a  mixed  question  of 
law  and  fact. 


: 


Whether  or  not  the  relation  of  partnership  exists  between 
t  wo  or  more  persons  with  respect  to  a  given  matter  is  a  mixed 
question  of  law  and  fact.121  "Where  there  is  no  controversy  as 
to  the  facts,  as  where  the  question  turns  upon  the  construction 
nf  a  written  agreement,  or  where  the  facts  have  been  separ- 
ately found  in  a  special  verdict,  the  court  may  determine 
whether  or  not  a  partnership  exists  as  a  matter  of  law.122 

business,  but,  by  an  agreement,  contracts  to  share  profits  with  an- 
other, the  agreement  does  not,  in  the  absence  of  other  proof  of  an 
intention  to  be  partners,  constitute,  inter  sese,  a  partnership.  It  is 
only  a  contract  for  sharing  of  profits.  Jernee  v.  Simonson,  58  N.  J. 
Eq.  282,  43  Atl.  370. 

121  Thompson  v.  First  Nat.  Bank,  111  U.  S.  529,  Burdick's  Cases, 
96;  Kingsbury  v.  Tharp,  61  Mich.  216,  28  N.  W.  74.  And  see  the  cases 
cited  in  the  two  following  notes.  "What  may  constitute  the  legal 
relation  of  partnership  between  two  or  more  persons  in  a  given  mat- 
ter is  a  question  of  both  fact  and  law."  Robinson  v.  Parker,  11  App. 
Cas.  (D.  C.)  140.  "What  constitutes  a  partnership  is  a  question  of 
law.  Whether  a  partnership,  in  the  legal  sense,  exists,  is  a  question 
of  fact."    Ellison  v.  Stuart  (Del.  Super.),  43  Atl.  838. 

122  Chisholm  v.  Cowles,  42  Ala.  179;  Morgan  v.  Farrel,  58  Conn. 
413,  20  Atl.  614;  Everitt  v.  Chapman,  6  Conn.  347;  Doggett  v.  Jordan, 
2  Fla.  541;  Lintner  v.  Millikin,  47  111.  178;  Kingsbury  v.  Tharp,  61 
Mich.  216,  28  N.  W.  74;  Cumpston  v.  McNair,  1  Wend.  (N.  Y.)  457; 
Farmers'  Ins.  Co.  v.  Ross,  29  Ohio  St.  429;  Boston  &  Colorado  Smelt- 
ing Co.  v.  Smith,  13  R.  I.  27,  43  Am.  Rep.  3;  May  v.  International 
Loan  &  Trust  Co.,  34  C.  C.  A.  450;  Waggoner  v.  First  Nat.  Bank,  4& 
Neb.  84,  61  N.  W.  112;  Rider  v.  Hammell,  63  Kan.  733,  66  Pac.  1026. 
The  rule  is  well  settled  that  the  construction  of  contracts,  written 
or  verbal,  rests  exclusively  with  the  court,  and  they  cannot  be  ex- 
pounded by  witnesses.  Lintner  v.  Millikin,  47  111.  178.  Where  the 
agreement  under  which  a  business  arrangement  is  carried  on,  and 
which  is  claimed  to  be  a  partnership,  is  in  writing,  and  free  from 
ambiguity  or  doubt,  its  legal  effect  must  be  determined  as  a  matter 
of  law,  and  the  intention  of  the  parties  gathered  therefrom;  but  if 


FUTURE  PARTNERSHIPS.  40 

Where  the  facts  are  not  admitted,  and  a  special  verdict  find- 
ing the  facts  only  is  not  demanded,  the  existence  of  a  partner- 
ship is  to  be  determined  by  the  jury  under  proper  instructions- 
from  the  court  as  to  what  facts,  if  found,  will  constitute  & 
partnership*23 


Contracts  foe  Futuee  Paetneeships. 

24.  "Partnership  is  not  the  result  of  an  agreement  to  .share 
profits  so  Ion g~a1Tany thing  remains  to  be  done  before 
the  right  to  share  them  accrues."  12i 

Persons  who  have  entered  into  a  contract  to  become  partners 
at  some  future  time,  or  upon  the  happening  of  some  future 
contingency,  do  not  become  partners  until  the  agreed  time  has 

the  terms  employed  leave  the  true  meaning  in  doubt,  the  construc- 
tion put  upon  the  contract  by  the  parties  thereto  may  be  looked  to 
in  determining  its  legal  effect.  Webster  v.  Clark,  34  Fla.  637,  16 
So.  601.  In  construing  a  contract  with  reference  to  whether  or  not 
it  creates  a  partnership,  a  federal  court  is  not  bound  to  follow  state 
decisions,  but  will  exercise  its  own  independent  judgment.  Ban- 
croft v.  Hambly,  94  Fed.  975,  36  C.  C.  A.  595. 

123  McGrew  v.  Walker,  17  Ala.  824;  Pardridge  v.  Ryan,  14  111.  App. 
598;  Chamberlain  v.  Jackson,  44  Mich.  320;  Densmore  v.  Mathews, 
58  Mich.  616,  26  N.  W.  146;  McDonald  v.  Matney,  82  Mo.  358;  Wag- 
goner v.  First  Nat.  Bank,  43  Neb.  84,  61  N.  W.  112;  Chase  v.  Stevens, 
19  N.  H.  465;  Seabury  v.  Bolles,  51  N.  J.  Law,  103,  16  Atl.  54;  Butler 
v.  Finck,  21  Hun  (N.  Y.)  210;  Meridan  Nat.  Bank  v.  Gallaudet,  120 
N.  Y.  298,  24  N.  E.  994;  McDuffie  v.  Bartlett,  3  Pa.  317;  Spencer  v. 
Jones,  92  Tex.  518.  "The  plaintiff  also  contends  that,  inasmuch  as 
participation  in  profits,  if  not  conclusive,  it  at  least  prima  facie  evi- 
dence of  partnership,  it  is  for  the  jury  to  say  whether  the  defendants 
are  partners  or  not.  This  may  be  so  if  there  is  testimony,  outside 
the  contract  and  its  execution,  going  to  show  the  existence  of  a  part- 
nership. But  if  there  is  no  such  outside  testimony — if  all  that  the 
members  of  the  firm  of  Mason,  Chapin  &  Co.  have  done  is  to  carry 
the  contract  into  effect  according  to  its  terms — then  the  question  is 

i2*Lindl.  Partn.  p.  20. 


50  WHAT  CONSTITUTES  A  PARTNERSHIP. 

arrived  or  the  contingency  lias  happened.126  An  executory 
contract  does  not  create  a  partnership.  The  contract  must  be 
executed,  and  the  partnership  actually  "launched,"  before  the 
relation  will  arise.1-0     Even  after  the  arrival  of  the  stipu- 

wholly  tor  the  court;  for  nothing  done  in  execution  of  the  contract 
could  create  a  partnership  unless  the  contract  is  itself  a  contract  for 
a  partnership,  and  whether  it  is  or  not,  it  heing  a  writing,  is  simply 
a  question  of  legal  construction."  Boston  &  Colorado  Smelting  Co.  v. 
Smith,  13  R.  I.  34. 

T-'Lindl.  Partn.  p.  20.  See,  also,  Snodgrass  v.  Reynolds,  79  Ala. 
452;  Doyle  v.  Bailey,  75  111.  418;  Wilson  v.  Campbell,  10  111.  383; 
Sailors  v.  Nixon-Jones  Printing  Co.,  20  111.  App.  509;  Handlin  v. 
Davis,  81  Ky.  34;  Hall  v.  Edson,  40  Mich.  651;  Dow  v.  State  Bank  of 
Sleepy  Eye,  88  Minn.  355,  93  N.  W.  121;  Brink  v.  New  Amsterdam 
Fire  Ins.  Co.,  5  Rob.  (N.  Y.)  104;  Latta  v.  Kilbourn,  150  U.  S.  546, 
Burdick's  Cases,  503,  Mechem's  Cases,  212.  "There  is,  of  course,  an 
essential  difference  between  a  mere  proposition  to  form  a  partner- 
ship, and  its  actual  constitution."    Atkins  v.  Hunt,  14  N.  H.  205. 

i2c  in  Meagher  v.  Reed,  14  Colo.  335,  24  Pac.  681,  the  court  said: 
"A  marked  distinction  exists  in  law  between  an  agreement  to  enter 
into  the  copartnership  relation  at  a  future  day  and  a  copartnership 
actually  consummated.  It  is  an  elementary  principle  that  a  partner- 
ship in  fact  cannot  be  predicated  upon  an  agreement  to  enter  into 
a  copartnership  at  a  future  day  unless  it  be  shown  that  such  agree- 
ment was  actually  consummated.  In  the  language  of  the  text-books, 
the  partnership  must  be  'launched.'  To  constitute  the  relation, 
therefore,  the  agreement  between  the  parties  must  be  an  executed 
agreement.  So  long  as  it  remains  executory,  the  partnership  is  in- 
choate, not  having  been  called  into  being  by  the  concerted  action 
necessary  under  the  partnership  agreement.  It  is  undoubtedly  true 
that  a  partnership  in  praesenti  may  be  constituted  by  an  agreement 
if  it  appears  that  such  was  the  intention  of  the  parties.  But  where 
it  expressly  appears  that  the  arrangement  is  contingent,  or  is  to 
take  effect  at  a  future  day,  it  is  well  settled  that  the  relation  of  part- 
ners does  not  exist,  and  that,  if  one  or  more  of  them  refuse  to  per- 
form the  agreement,  there  is  no  remedy  between  the  parties  except 
a  suit  in  equity  for  specific  performance,  or  an  action  at  law  for  the 
recovery  of  damages,  should  any  be  sustained."  See,  also,  Wilson 
v.  Campbell,  10  111.  383.  A  subscription  to  shares  is  but  an  act  or 
declaration  of  the  subscriber  to  become  a  partner,  and  is  executory 
only.    Hedge's  Appeal,  63  Pa.  273. 


FUTURE  PARTNERSHIPS.  51 

lated  time,  the  parties  are  not  necessarily  partners,  and  in  fact 
they  are  not  partners  unless  the  partnership  is  launched.12' 
Any  act,  the  performance  of  which  is  made  a  condition  pre- 
cedent to  the  formation  of  the  partnership,  must  be  performed 
before  a  partnership  will  be  held  to  exist,128  though  of  course 
it  is  competent  for  the  parties  themselves  to  waive  conditions 
]3recedent ;  and  such  conditions  are  waived  where  the  parties 
actually  ''launch"  the  partnership  without  waiting  for  per- 
formance.129 

It  is  often  difficult  to  determine  whether  the  intention  of 
the  parties  was  to  create  a  present  partnership,  or  only  to 
stipulate  for  a  partnership  in  the  future.  "The  test,  how- 
ever, is  to  ascertain,  from  the  terms  of  the  agreement  itself, 
whether  any  time  has  to  elapse,  or  any  act  remains  to  be  done, 
before  the  right  to  share  profits  accrues,  for,  if  there  is,  the 
parties  will  not  be  partners  until  such  time  has  elapsed  or  act 

127  Wilson  v.  Campbell,  10  111.  383;  Doyle  v.  Bailey,  75  111.  418; 
Gray  v.  Gibson,  6  Mich.  300.  See,  also,  preceding  note.  Where  the 
partnership  articles  are  signed,  and  an  attempt  is  made,  as  a  firm, 
to  purchase  goods  on  credit,  the  partnership  is  launched,  although 
the  partners  afterwards  discontinue  it  because  of  inability  to  obtain 
goods  on  credit.  Thurston  v.  Perkins,  7  Mo.  29.  In  Battley  v.  Lewis, 
1  Man.  &  G.  155,  the  parties  actually  commenced  business  on  the  day 
named,  and  it  was  wholly  immaterial,  as  regarded  the  question  be- 
fore the  court,  what  the  terms  of  the  partnership  were.  See  Lindl. 
Partn.  p.  23. 

128  Johnston  v.  Eichelberger,  13  Fla.  230;  Metcalf  v.  Redman,  43 
111.  264;  Hobart  v.  Ballard,  31  Iowa,  521;  Haskins  v.  Burr,  106  Mass. 
48;   Hoile  v.  York,  27  Wis.  209. 

129  pierce  v.  Whitney,  39  Ala.  172;  Johnston  v.  Eichelberger,  13, 
Fla.  230;  Palmer  v.  Tyler,  15  Minn.  106;  Hartman  v.  Woehr,  18  N.  J. 
Eq.  383;  McStea  v.  Matthews,  50  N.  Y.  166;  Cook  v.  Carpenter,  34  Vt. 
121.  Where  all  the  proposed  partners  have  not  signed  the  partner- 
ship articles,  but  those  who  have  signed  proceed  to  act  as  partners 
without  waiting  for  the  signature  of  the  others,  the  persons  so  act- 
ing are  partners  inter  se.  Hubbard  v.  Matthews,  54  N.  Y.  43,  13  Am. 
Rep.  562. 


52  WHAT  CONSTITUTES  A  PARTNERSHIP. 

has  been  performed."  1S0     The  real  intention  of  tlie  parties 
La  the  controlling  consideration.131 

A  con!  met  for  ;i  future  partnership  is  annulled  by  the  death 
of  a  party  while  the  contract  is  yel  executory.13  !i 

Illustrations. 

One  who  has  stipulated  for  an  option  to  become  a  partner 
in  a  certain  business  is  not  a  partner  until  he  has  exercised 
his  option  and  elected  to  become  a  partner.132  "Where  it  is 
the  intention  of  the  parties  not  to  be  partners  until  they  have 
signed  formal  articles  of  partnership,  they  are  not  partners 
until  they  have  signed  such  articles.133     But  unless  the  sign- 

isoLindl.  Partn.  p.  20.  Where  it  is  provided  that  the  shares  of 
a  joint-stock  association  may  be  transferred  only  on  consent  of  the 
directors,  a  purchaser  of  shares  is  not  a  partner  until  such  consent 
has  been  given.  Kingman  v.  Spurr,  7  Pick.  (Mass.)  235.  See,  also, 
Perring  v.  Home,  4  Bing.  28.  One  who,  upon  the  repayment  of  cer- 
tain money,  advanced  by  him  to  the  lessee  of  a  music  hall,  secured 
by  a  mortgage  of  the  lease  and  fixtures  of  the  music  hall,  is  to  be- 
come a  part  owner  in  the  business  of  the  hall,  does  not,  prior  to 
such  repayment,  occupy  the  position  of  a  partner  in  the  business, 
and  become  liable  for  advances  made  to  the  enterprise  by  a  third 
party.     McLeod  v.  Miner,  38  App.  Div.   (N.  Y.)   115. 

131  Gill  v.  Kuhn,  6  Serg.  &  R.  (Pa.)  333.  See,  generally,  supra, 
§  13,  "Intention  the  Real  Test."  Where  the  contract  states  that  the 
parties  thereto  "have  entered"  into  a  partnership,  and  no  time  is 
stated  at  which  the  partnership  shall  commence,  it  commences  at 
once.     Ingraham  v.  Foster,  31  Ala.  123. 

i3ia  Dow  v.  State  Bank  of  Sleepy  Eye,  88  Minn.  355,  93  N.  W.  121. 
And  see  In  re  Hoagland's  Estate,  51  App.  Div.  347,  64  N.  Y.  Supp. 
920. 

132 Morrill  v.  Spurr,  143  Mass.  257;  Irwin  v.  Bidwell,  72  Pa.  244; 
Ex  parte  Davis,  4  De  Gex,  J.  &  S.  523;  Gabriel  v.  Evill,  9  Mees  &  W. 
297;  Howell  v.  Brodie,  6  Bing.  N.  C.  44.  An  option  to  elect  not  to- 
be  a  partner  is  valid,  at  least  between  the  parties.  Bidwell  v.  Madi- 
son, 10  Minn.  13. 

133  Martin  v.  Baird,  175  Pa.  540,  34  Atl.  809.  In  Baldwin  v.  Bur- 
rows, 47  N.  Y.  199,  several  persons  purchased  goods  in  common,  with 
the  intention   of  subsequently  forming  a  partnership  in  regard  to 


ASSOCIATIONS  NOT  FOR  PROFIT.  53 

ing  of  articles  was  intended  to  be  a  condition  precedent  to  the 
existence  of  a  partnership,  the  parties  may  be  partners,  al- 
though they  in  fact  contemplated  signing  formal  articles,  but 
did  not  do  so.134  Signing  partnership  articles,  like-any  other 
condition  precedent,  may  be  waived  by  actually  launching  the 
partnership  without  waiting. -far  pp.rfnrm^p^- 135 

Good  Faith  Required. 

The  agreement  for  a  future  partnership  must  be  such,  bona 
fide,  for  if  it  is  a  mere  colorable  device  for  creating  a  partner- 
ship, and  at  the  same  time  concealing  it,  so  as  to  avoid  partner- 
ship liability,  it  will  be  held  to  create  a  partnership.136 


Associations  ISTot  for  Profit. 

25.     Societies  and  clubs,  the  object  of  which  is  not  to  share 
profits,  are  not  partnerships,  nor  are  their  members,  as  ..... 
such,  liable  for  each  other's  acts. 

Where  the  object  of  an  association  is  not  to  share  profits,  it 
is  clearly  not  a  partnership,137  because,  as  has  been  seen,  the 
essential  element  and  ultimate  test  of  a  partnership  is  an 
agreement  to  share  the  profits  of  a  business  as  common  own- 
such  goods,  but  without  any  present  contract  for  the  sale  of  the 
goods  and  a  division  of  the  profits.  It  was  held  that  until  the  part- 
nership agreement  was  actually  made,  no  partnership  existed  be- 
tween the  joint  purchasers,  but  that  they  were  merely  tenants  in 
common  of  the  goods. 

134  Wood  v.  Cullen,  13  Minn.  394;  Hubbard  v.  Matthews,  54  N.  Y. 
43,  47;  Battley  v.  Lewis,  1  Man.  &  G.  155. 

185  See  Battley  v.  Lewis,  1  Man.  &  G.  155,  and  remarks  of  Lindley 
(page  23)   thereon.     See,  also,  supra,  this  section. 

isoCourtenay  v.  Wagstaff,  16  C.  B.  (N.  S.)  110,  per  Williams,  J., 
page  131. 

187  "it  is  a  mere  misuse  of  words  to  call  such  associations  partner- 
ships."    Lindl.  Partn.  p.  50. 


54  WHAT  CONSTITUTES  A  PARTNERSHIP. 

era.188  The  members  of  such  associations  are  only  liable  for 
their  own  personal  acts,  or  for  the  acts  of  their  authorized 
agents.189  "And  the  agency  must  he  made  out  by  the  person 
who  relies  on  it,  for  none  is  implied  Ivy  the  mere  fact  of  asso- 
ciation."  n"  'Inn-,  the  members  of  a  Young  Men's  Christian 
Association,  Masonic  Lodge,  <»r  other  similar  society  or  club, 
are  nol  partners.1"  So,  co-operative  stores  which  sell  only  to 
their  members  are  not  partnerships,  but  where  thev  sell  to  o 
siders  they  are  partners 


1-42 


«8  An  agreement  that  something  shall  be  attempted  with  a  view 
to  gain,  and  that  the  gain  shall  be  shared  by  the  parties  to  the  agree- 
ment, is  the  grand  characteristic  of  every  partnership,  and  is  the 
leading  feature  of  nearly  every  definition  of  the  term.  Lindl.  Partn. 
p.  2;  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  436;  Reg.  v.  Robson, 
16  Q.  B.  Div.  137.     See  ante,  §§  14,  15. 

139  Burt  v.  Lathrop,  52  Mich.  106,  17  N.  W.  716,  Mechem's  Cases, 
4;  Eichbaum  v.  Irons,  6  Watts  &  S.   (Pa.)   67. 

140  Lindl.  Partn.  p.  50.  See,  also,  Richmond  v.  Judy,  6  Mo.  App. 
465;  Ash  v.  Guie,  97  Pa.  493,  Burdick's  Cases,  30;  Sizer  v.  Daniels, 
66  Barb.  426;  Flemyng  v.  Hector,  2  Mees  &  W.  172;  Burls  v.  Smith, 
7  Bing.  705. 

hi  Woodward  v.  Cowing,  41  Me.  9;  Richmond  v.  Judy,  6  Mo.  App. 
465;  Lafond  v.  Deems,  81  N.  Y.  507;  Ash  v.  Guie,  97  Pa.  493,  Bur- 
dick's Cases,  30;  Caldicott  v.  Griffiths,  8  Exch.  898;  Flemyng  v. 
Hector,  2  Mees  &  W.  172;  Reg.  v.  Robson,  16  Q.  B.  Div.  137.  Organi- 
zation for  religious  and  social  purposes,  the  members  living  as  one 
family.  Teed  v.  Parsons,  202  111.  455,  66  N.  E.  1044.  Such  societies 
have,  however,  been  called  "partnerships."  See  Lloyd  v.  Loaring, 
6  Ves.  773;  Silver  v.  Barnes,  6  Bing  N.  C.  180;  Beaumont  v.  Mere- 
dith, 3  Ves.  &  B.  180.  An  association,  each  member  of  which  agrees 
in  writing  to  pay  the  sum  subscribed  by  him  for  the  purpose  of 
building  a  meeting  house,  which,  when  completed,  is  to  be  the  prop- 
erty of  the  subscribers  in  the  proportions  of  the  amounts  invested 
in  it  by  them  respectively,  is  not  a  partnership.  Woodward  v.  Cow- 
ing, 41  Me.  9.  Artificial  business  organizations  in  Ohio,  except  clubs 
and  organizations  not  for  profit,  are  either  corporations  or  partner- 
ships. There  is  nothing  intermediate.  Wehrman  v.  McFarland,  9 
Ohio  Dec.  400. 

»a  Hodgson  v.  Baldwin,  65  111.  532;  Atkins  v.  Hunt,  14  N.  H.  205, 
Mechem's  Cases,  49.     See,  generally,  Henry  v.  Jackson,  37  Vt.  431. 


CO-OWNERSHIP  DISTINGUISHED.  55 

Co-OWXEESHIP   DISTINGUISHED. 

26.     The  common  ownership  of  property  does  not,  of  itself. 

create  any  partnership  between  the  owners.  But  if  they 
employ  the  common  property  in  a  business,  and  share 
the  profits  as  distinguished  from  the  gross  returns,  they 
are  partners. 

Although  the  incidents  of  partnership  are  different  in  many 
respects  from  the  incidents  of  co-ownership,143  it  is  neverthe- 
less often  a  very  difficult  question  to  determine  which  of  the 
two  relations  exist,  for  this  question  must  be  determined  be- 

i«  Speaking  generally,  and  excluding  all  exceptional  cases,  the 
principal  differences  between  co-ownership  and  partnership  may  be 
stated  as  follows:  (1)  J^o^wnership_ is  not  necessarily  the  result 
o£agreement.     Partnership  is.     (2)  Co  ownerhlp  does  not  necessarily 


involve  community  of  profit  or  of  loss.  Partnership  does.  (3)  One 
ctj-owner  ran,  without  the  consent  of  the  others,  transfer  his  inter- 
est to  a  stranger,  so  as  to  put  him  in  the  same  position,  as  regards 
fhe'orher  owners,  as  the  transferor  himself  was  before  the  transfer. 
A  partner  cannot  do  this.  (4)  One  co-owner  is  not,  as  such,  the 
agent,  real  or  implied,  of  the  others.  A  partner  is.  (5)  One  co- 
owner  has  no  lien  on  the  thing  owned  in  common  for  outlays  and 
expenses,  nor  for  what  may  be  due  from  the  others  as  their  shares.  \f\ 
of  a  common  debt.  A  partner  has.  (6)  One  co-owner  of  land  is  en- 
tttTecTTo  have  it  divided  between  himself  and  co-owners,  but  not— *^ 
Cexcept  by  virtue  of  a  recent  statute,)  to  have  it  sold  against  their  / 

consent.  A  partner  has  no  right  to  partition  in  specie,  but  is  enti- 
tled, op  a  dissolution,  i  :  the  partnership  property,  whether 
land  or  not,  sold,  and  the  proceeds  divided.  (7)  As, between  the 
real  and  personal  representatives  of  a  deceased  co-owner  of  freehold 
land,  the  equitable  as  well  as  the  legal  interest  in  his  share  is  real 
estate,  whilst,  as  between  the  real  and  personal  representatives  of  a 
deceased  partner,  the  equitable  interest^  fo  his  share  of  partnership 
freehold  property  is  treated  as  pergonal  ,.esta_teL  althoujgh^the^^eg^l 
interest  in  it  is  t*?,\  fffitatp  (8)  Co-ownership  not  necessarily  exist- 
ing; for  the  sake  of  gain,  and  partnership  existing  for  no  other  pur- 
pose, {.he  remedies,  by  way  of  account  and  otherwise,  which  one  co- 
owner  has  against  the  others,  are  in  many  important  respects  differ- 


56  WHAT  CONSTITUTES  A  PARTNERSHIP. 

fore  it  is  known  which  set  of  incidents  attach.  If  two  per- 
Bona  purchase  property  to  hold  jointly  or  in  common,  they  are 
co-owners,  and  nol  partners,  unless  that  was  their  intention.144 
Moreover,  there  may  be  an  agreement  as  to  the  management 
and  use  of  the  commoi]  property,  and  ihe  application  of  the 
produce  or  gains  derived  from  it,  without  any  partnership 
arising.1 '"'  I  f  gnnds  arc  purchased  for  resale  under  an  agree- 
ment to  divide  the  profits  from  the  transaction,  the  purchasers 
arc  partners.146  But  if  the  goods  are  not  purchased,  for  re- 
sale, but  for  the  purpose,  of  dividing,  the,  goods  themselves  be- 
tween the  purchasers,  there  is  no  partnership.147     "If  each 

ent  from,  and  less  extensive  than,  those  which  one  partner  has 
against  his  copartners."    Lindl.  Partn.  p.  58. 

miliff  v.  Brazill,  27  Iowa,  131:  Thurston  v.  Horton,  16  Gray 
(Mass.)  274;  State  Bank  v.  O.  S.  Kelley  Co.,  47  Neb.  678,  66  N.  W. 
619;  Butler  Sav.  Bank  v.  Osborne,  159  Pa.  10,  28  Atl.  163.  The  joint 
purchase  of  property  by  several  does  not  of  itself  constitute  a  part- 
nership.    Breard  v.  Blanks,  51  La.  Ann.  1507,  26  So.  618. 

145  French  v.  Strying,  20  C.  B.  (N.  S.)  357,  366,  Burdick's  Cases,  22; 
Pillsbury  v.  Pillsbury,  20  N.  H.  90;  Woodward  v.  Cowing,  41  Me.  9; 
Sargent  v.  Downey,  45  Wis.  498. 

i«  Reid  v.  Hollinshead,  4  Barn.  &  C.  867.  See  Farmers'  Ins.  Co. 
v.  Ross,  29  Ohio  St.  429.  Where  several  parties  unite  in  the  pur- 
chase of  real  estate,  not  as  a  permanent  investment,  but  as  a  specu- 
lation, and  with  a  view  of  selling  the  same  for  profit,  and  there  is 
a  community  of  ownership  of  the  property,  community  of  power  in 
carrying  on  the  enterprise,  and  community  of  interest  in  the  profits 
and  losses  arising  from  the  same,  it  will  ordinarily  be  treated  as  a 
partnership.  Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484.  If  two  per- 
sons buy  a  horse,  each  paying  one-half  of  the  purchase  money,  under 
an  agreement  that  either  of  them  having  possession  of  the  horse 
shall  provide  for  his  keeping,  without  cost  to  the  other,  and  that 
each  shall  offer  the  horse  for  sale  and  endeavor  to  procure  a  pur- 
chaser at  a  profit  over  his  cost,  but  that  neither  shall  sell  the  horse 
Avithout  the  concurrence  of  the  other,  they  are  tenants  in  common 
of  the  horse,  and  not  partners.  Goell  v.  Morse,  126  Mass.  480,  Bur- 
dick's Cases,  23. 

147  Coope  v.  Eyre,  1  H.  Bl.  37;  Hoare  v.  Dawes,  1  Doug.  371;  Gib- 
son v.  Lupton,  9  Bing.  297. 


CO-OWNERSHIP  DISTINGUISHED.  57 

■owner  does  nothing  more  than  take  his  share  of  the  gross  re- 
turns obtained  by  the  use  of  the  common  property,  partner- 
ship is  not  the  result. 14S  On  the  other  hand,  if  the  owners 
convert  those  returns  into  money,  brinff  that  money  into  a 
common  stock,  defray  out  of  it  the  expenses  pf  obtaining  the 
returns,  and  then  divide  the  net  profits,  partnership  is  cre- 
ated in  the  profits,  if  not  also  in  the  property  which  yields 
them."  149  There  may  be  co-ownership  without  partnership 
in  the  property  itself,  together  with  a  real  partnership  in  the 
business  of  managing  it  for  the  common  benefit.150 

i*8Gilman  v.  Cunningham,  42  Me.  98;  Thurston  v.  Horton,  16 
Gray  (Mass.)  274;  Chase  v.  Stevens,  19  N.  H.  465;  Butler  Sav.  Bank 
v.  Osborne,  159  Pa.  10,  28  Atl.  163.  See  supra,  §  20,  "Sharing  Gross 
Returns."  Tenants  in  common  engaged  in  the  use,  employment,  and 
development  of  their  common  property  will  be  presumed,  in  the  ab- 
sence of  proof  of  a  contract  of  partnership,  to  continue  to  be  ten- 
ants in  common,  and  not  partners.  Dunham  v.  Loverock,  158  Pa. 
197,  27  Atl.  990,  Mechem's  Cases,  6;  Butler  Sav.  Bank  v.  Osborne, 
159  Pa.  10,  28  Atl.  163.  The  several  owners  of  a  vessel  are  tenants 
in  common,  and  not  partners.  Coursin's  Appeal,  79  Pa.  20;  Macy  v. 
DeWolf,  3  Woodb.  &  M.  193,  Fed.  Cas.  No.  8,933;  Helme  v.  Smith, 
7  Bing.  709,  Burdick's  Cases,  21.  But  they  may  be  partners.  Camp- 
bell v.  Mullett,  2  Swanst.  551;  Hopkins  v.  Forsyth,  14  Pa.  34;  Phil- 
lips v.  Purington,  15    Me.  425;  Ward  v.  Bodeman,  1  Mo.  App.  272. 

noLindl.  Partn.  p.  53.  But  see  French  v.  Styring,  2  C.  B.  (N.  S.) 
355,  Ames'  Cas.  Partn.  41,  Burdick's  Cases,  22,  wherein  Willis,  J., 
said  that  if  two  tenants  in  common  of  a  house  agreed  that  one  of 
them  should  have  the  general  management  and  provide  funds  for 
necessary  repairs,  and  that  the  net  rent  should  be  divided  between 
them,  no  partnership  would  be  created.  Where  N.  purchased  from 
A.,  who  owned  a  stallion  jointly  with  B.,  his  half  interest  in  the  use 
of  the  stallion  for  a  certain  season,  and  subsequently  entered  into 
a  contract  with  B.  to  stand  the  horse  in  partnership,  N.  to  pay  all 
expenses,  and  to  reimburse  himself  out  of  moneys  collected  for  the 
services  of  the  horse,  the  profits,  if  any,  to  be  divided  equally  be- 
tween them,  there  was  a  partnership.  Smith  v.  Brannon,  22  Ky.  L. 
R.  178,  51  S.  W.  178. 

150  per  Cockburn,  C.  J.,  in  French  v.  Styring,  2  C.  B.  (N.  S.)  355. 
Burdick's  Cases,  22;  Campbell  v.  Mullett,  2  Swanst.  551.  See,  also, 
Thurston  v.  Horton,  16  Gray   (Mass.)   274.     "'Part  owners  of  a  ship 


5S  WHAT  CONSTITUTES  A  PARTNERSHIP. 

Corporations  I  Distinguished. 

Corporations  are  distinguished  from  partnerships  prin- 
cipally in  two  particulars — 

(a)  Corporations  are  organized  under  a  franchise  from  the 
state,  while  partnerships  are  not,  and 

(b)  Corporations  are  legal  entities  while  partnerships  are 
not. 

"Both  partnerships  and  private  corporations  are  conven- 
tional, so  far  as  the  members  are  concerned.  The  difference 
consists  in  this:  The  former  are  authorized  by  the  general 
law  among  natural  persons  exercising  their  ordinary  powers; 
the  latter  by  a  special  authority,  usually,  if  not  necessarily, 
emanating  from  the  legislature,  and  conferring  extraordinary 
privilege-."  ,r'1  But  the,  most -important  distinction  is  that 
a  corporation  is  recognized  as  a  Wal  entity,  or  urtififtiftl  nar- 
son.  separate  and  distine.t.  from  its  members  or  stockholders, 
while,  as  will  be  seen,  a  partnership  is  not  so  regarded.152  As 
a  consequence  of  this  doctrine,  the  continued  existence  of  the 
corporate  entity  is  not  affected  by  changes  in  its  membership. 
But  a  partnership  is  ahsohitely  dissolved  by  any  change  in  the 
members  composing  il.ir,;!  The  rights  and  obligations  of  the 
corporation  belong  to  the  fictitious  person,  and  not  to  the  stock- 
holders, and  can  not  be  exercised  or  enforced  directly  by  or 

do  not,  by  simply  using  it  in  a  joint  enterprise,  become  partners  as 
to  the  ship.'  Civ.  Code,  §  2396.  But  the  use  of  a  ship  is  distinct 
from  the  ship  itself,  and  there  may  be  a  partnership  in  the  use  or 
earnings,  although,  as  to  the  vessel  itself,  the  parties  are  tenants  in 
common."  Hendy  v.  March,  75  Cal.  569,  17  Pac.  702,  citing  Merritt 
v.  Walsh,  32  N.  Y.  689;  Bulfinch  v.  Winchenbach,  3  Allen  (Mass.) 
161;  Mumford  v.  Nicholl,  20  Johns.  (N.  Y.)  633;  Hinton  v.  Law,  10 
Mo.  701. 

'■•'  Per  Cowen,  J.,  in  Thomas  v.  Dakin,  22  Wend.  (N.  Y.)  109. 

'"-'See  post,  c.  4,  "Firm  as  an  Entity." 
3ee  post,  §  143. 


PROMOTORS  OF  CORPORATIONS.  59 

against  the  stockholders.  But  the  rights  and  liabilities  of  a 
partnership  are  the  rights  and  liabilities  of  the  ipdjvjo'in<aJ 
partners,  and  are  enforcible  bv  or  against  them,  fotifr?'fl- 
ually.154  Thus,  the  profits,  and  in  fact  all  the  property  of 
the  corporation,  belongs  to  the  corporation,  and  not  to  the 
stockholders.155  But, the. profits  and  property  of  ft  partner- 
ship belong  to  the  partners.156  And  the  rule  is  the  same 
where  the  stockholders  are  all  corporations  who  form  another 
corporation  for  co-operative  action. 156a 


Promotees  of  Corporations  or  Joixt-Stock  Companies. 

28.     Persons  associated  for  the  purpose  of  forming  a  corpo- 
ration or  a  joint-stock  company  are  net  partners. 

Corporations. 

Promoters  of  corporations  are  not  partners,  because  they 
have  not  agreed  to  share  the  profits  of  a  business  as  common 

164  Lindl.  Partn.  p.  5.  See,  also,  post,  c.  4,  "Firm  as  an  Entity," 
and  c.  10,  "Actions."  The  corporation,  and  not  its  stockholders, 
must  bring  trover  or  replevin  for  its  property.  Tomlinson  v.  Brick- 
layers' Union  No.  1,  87  Ind.  308;  Button  v.  Hoffman,  61  Wis.  20,  20 
N.  W.  667. 

«5  Queen  v.  Arnaud,  16  L.  J.  2  B.  50,  1  Cum.  Cas.  Corp.  30.  The 
stockholders  have  no  power  to  sell  or  convey  corporate  property. 
This  must  be  done  in  the  corporate  name.  Wheelock  v.  Moulton,  15 
Vt.  519;  Humphreys  v.  McKissock,  140  U.  S.  304.  A  person  owning 
all  the  stock  of  a  corporation  has  not  such  an  equitable  estate  in  its 
realty  as  authorizes  him  to  convey  it  in  his  own  name.  Parker  v. 
Bethel  Hotel  Co.,  96  Tenn.  252,  34  S.  W.  209. 

H»e  See  post,  c.  4,  "Firm  as  an  Entity,"  and  c.  7,  "Partnership 
Property." 

iseaThe  ordinary  contract  between  a  union  depot  corporation  and 
several  railroad  companies  holding  the  stock  of  the  depot  company 
and  making  joint  use  of  the  depot  facilities  does  not  create  a  part- 
nership. Brady  v.  Chicago  &  G.  W.  R.  Co.  (C.  C.  A.)  114  Fed.  106,. 
57  L.  R.  A.  712. 


60  WHAT  CONSTITUTES  A  PARTNERSHIP. 

owner--.  It'  there  can  be  said  to  be  any  agreement  to  shun' 
profits,  ii  is  i"  do  so  as  stockholders.  The  ownership  of  the 
profits,  when  earned,  will  be  in  the  corporation  until  distrib- 
uted as  dividends.  So,  also,  the  agreement  between  promoters 
is  for  a  future  relation,  and,  upon  principles  just  explained, 
such  a  contract  does  not  create  a  present  partnership.107 

Joint-Stock-  ( 'ompan 

Persons  associated  for  the  purpose  of  forming  a  joint-stock 
company  are  not  partners,168  although,  as  will  be  seen  later, 
joint-stock  companies  are  a  species  of  partnership.159  The 
obvious  reason  is  that  the  contract  between  them  is  simply  one 
for  a  future  partnership,  which,  as  has  been  seen,  does  not 
create  a  present  partnership.160 

i57Lindl.  Partn.  p.  23;  Reynell  v.  Lewis,  15  Mees.  &  W.  517,  Bur- 
dick's  Cases,  33;  Capper's  Case,  1  Sim.  (N.  S.)  178;  Mosier  v.  Parry, 
GO  Ohio  St.  388,  54  N.  E.  364;  Ryland  v.  Hollinger  (C.  C.  A.),  117 
Fed.  216.  Persons  who  own  and  conduct  a  business  jointly  are  part- 
ners; and  though  they  contemplate  a  speedy  incorporation  and  ex- 
press that  intent  in  their  contract,  they  are,  in  the  meantime,  part- 
ners.   Bancroft  v.  Hambly,  36  C.  C.  A.  601. 

"a West  Point  Foundry  Ass'n  v.  Brown,  3  Edw.  Ch.  N.  Y.  284; 
Lindl.  Partn.  p.  24,  citing  Wood  v.  Duke  of  Argyll,  6  Man.  &  G.  928; 
Hamilton  v.  Smith,  5  Jur.  (N.  S.)  32;  Hutton  v.  Thompson,  3  H.  L. 
Cas.  161;  Bright  v.  Hutton,  3  H.  L.  Cas.  368.  An  application  for 
shares  and  payment  of  the  first  deposit  does  not  constitute  one  a 
partner,  where  he  had  not  interfered  in  the  concern.  Hedge's  Ap- 
peal, 63  Pa.  273.  Persons  who  subscribe  for  shares  in  joint-stock 
companies  and  pay  deposits,  but  do  not  comply  with  the  full  con- 
ditions of  the  association,  and  never  become  entitled  to  profits,  are 
not  liable  for  debts,  unless  they  are  active  in  contracting  them,  or 
hold  themselves  out  as  partners.  The  same  principle  will  apply, 
as  far  as  it  can,  to  a  suggested  limited  partnership  not  carried 
through.  West  Point  Foundry  Ass'n  v.  Brown,  3  Edw.  Ch.  (N.  Y.) 
284. 

«9  See  infra,  §  12. 

ico  See  supra,  §  24. 


ILLEGAL  CORPORATIONS.  gj 

Stockholders  ix  Illegal  or  Defective  Corporations. 

2|i-    Where  the  corporation  is  wholly  illegal  anrj  nnan^r. 
>^5y   ized  by  law,  the  stockholders  are  liable  as  partners. 


30. 


Members  of  a  corporation  de  facto,  acting  in  good  faith 
under  the  belief  that  they  constitute  a  corporation,  are 
not  liable  as  partners. 

31.  Mere  defects  in  organization,  such  as  failure  to  comply 
with  some  statutory  requirement,  will  not,  by  the 
weight  of  authority,  render  the  members  liable  as  part- 
ners. 

Illegal  or  Unauthorized  Corporations. 

Where  persons  assume  to  act  as  a  corporation  wholly  with- 
out authority  of  law  they  have  usually  been  held  to  be  liable 
as  partners.161  In  such  a  case  they  must  be  presumed  to 
know  that  they  are  not  stockholders  in  a  valid  corporation, 
and,  as  it  is  clear  that  they  intended  to  own  and  share  the 
profits  in  common,  they  are  partners,  because  they  have  in- 
tended and  done  those  things  which  in  law  constitute  a  part- 
nership.16*    Even  good  faith  and  fhe  adyice  of  coimgel  wi]1 

not  overcome  the  presumption  of  knowledge  of  law,  and  pro- 
tect them  from  partnership  liability. 163  Thus,  in  the  absence 
of  any  statute  under  which  a  corporation  could  be  created,  the 
members  of  an  attempted  corporation  are  liable  as  partners.164 
So,  members  of  a  corporation  organized  for  one  purpose  un- 
der a  statute  which  authorizes  corporations  only  for  other 

im  Where  the  corporation  is  simply  a  disguise  for  gambling  trans- 
actions.  the  members  are  personally  liable.  McGrew  v.  City  Produce 
Exch.,  85  Tenn.  572,  4  Am.  St.  Rep.  771. 

«•"  See  supra,  §  13,  "Intention  the  Real  Test  " 

"a  Eaton  v.  Walker,  76  Mich.  579,  43  N.  W.  638,  Mechem's  Cases  8 

164  in  re  Mendenhall,  9  N.  B.  R.  497,  Fed.  Cas.  No.  9,425. 


,;o  WHAT  CONSTITUTES  A  PARTNERSHIP. 

purposes,  are  liable  as  partners.168     Incorporators  under  an 
unconstitutional  law  are  Liable  as  partners.166 

De  Facto  <  Corporations. 

The  members  or  stockholders  of  a  de  facto  corporation,  as 
distinguished  from  one  which  is  entirely  illegal  or  unauthor- 
ized, are  no1  liable  as  partners.167  The  status  of  a  de  facto 
corporation  can  not  be  attacked  save  in  a  direct  proceeding  for 
that  purpose  by  the  state. 

Defects  in  Organization. 

Where  persons  ad  in  good  faith,  honestly  believing  that 
they  constitute  a  corporation,  but,  owing  to  a  failure  to  com- 
ply with  some  statutory  requirement,  no  valid  incorporation 
lias  been  effected,  the  weight  of  authority  is  that  they  can  not 
be  held  liable  as  partners,108  but  the  authorities  taking  a  con- 

165  Vredenburg  v.  Behan,  33  La.  Ann.  627.  In  this  case  there  was 
an  attempt  to  incorporate  a  rifle  club  under  a  statute  which  author- 
ized corporations  only  for  literary,  scientific,  or  charitable  purposes. 
See,  also,  Booth  v.  Wonderly,  36  N.  J.  Law,  250;  Merchants'  &  Manu- 
facturers' Bank  v.  Stone,  38  Mich.  779,  and  note  the  dissenting 
opinion. 

we  Baton  v.  Walker,  76  Mich.  579,  43  N.  W.  638,  Mechem's  Cases,  S. 
But  see  State  v.  How,  1  Mich.  512. 

167  Stout  v.  Zulick,  48  N.  J.  Law,  599,  7  Atl.  362;  Snider's  Sons 
Co.  v.  Troy,  91  Ala.  244,  8  So.  658;  Merriman  v.  Magiveny,  12  Heisk. 
(Tenn.)  494;  Cannon  v.  Brush  Elec.  Co.,  96  Md.  446,  54  Atl.  121; 
American  Salt  Co.  v.  Heidenheimer,  80  Tex.  344;  Planters'  &  Miners' 
Bank  v.  Padgett,  69  Ga.  159;  Merchants'  &  Manufacturers'  Bank  v. 
Stone,  38  Mich.  779;   In  re  Gibb's  Estate,  157  Pa.  59,  27  Atl.  383. 

168  Humphreys  v.  Mooney,  5  Colo.  282;  Stafford  Nat.  Bank  v.  Pal- 
mer, 47  Conn.  443;  Cross  v.  Pinckneyville  Mill  Co.,  17  111.  54;  Tar- 
bell  v.  Page,  24  111.  46;  Doty  v.  Patterson,  155  Ind.  60,  56  N.  E.  668; 
Ward  v.  Brigham,  127  Mass.  24;  First  Nat.  Bank  v.  Almy,  117  Mass. 
476;  Fay  v.  Noble,  7  Cush.  (Mass.)  188;  Seacord  v.  Pendleton,  55 
Hun,  579,  9  N.  Y.  Supp.  46;  Raisbeck  v.  Oesterricher,  4  Abb.  N.  C. 
i  X.  V.)  444;  Central  City  Sav.  Bank  v.  Walker,  66  N.  Y.  424;  Fuller 
v.  Rowe,  57  N.  Y.  23;   Second  Nat.  Bank  v.  Hall,  35  Ohio  St  158; 


ILLEGAL  CORPORATIONS.  63 

trary  view  are  very  numerous.18*     Of  course,  many  cases  of 

defectively  organized  corporations  fall  under  the  rule  of  de 

facto  corporations.     It  has  been  held  that  a  person  who  ™P. 

tracts  with  an  association  without  aT1Y, knowledge  or  imt^ce,  of 

^  e];mn "f  '^P'^-  «;.xistc.,ice  may  sue  then iates  as 

partners,  and  show  that  th.j  W.  ^^^,        }     with  tho 

law  under  which,  they  c]n\m  |ft  fa  ormisaj.i"  Where  the 
members  of  an  existing  partnership  attempt  to  form  a  corpora- 
tion to  carry  on  the  corporate  business,  and,  through  noncom- 
pliance with  the  law,  no  valid  corporation  is  formed,  the  mem- 
bers remain  partners."*  The  individuals  who  transit,  ft. 
bsiness  on  behalf  of  thf  ^WOrt  corporatio„  ^  m 
li_abe  m  the  same  wav  ¥  ™  ^Wsible  a^.t.  is  personally 
liable  where  he  has  no  rppl  p^^i  m  » 

f  Findlarvd  J\T  n   ^  °S  218:  C°Chran  V"  ArD0,d'  58  Pa-  399'-  stokes 
v.  Findlay,  4  McCrary,  205,  Fed.  Cas.  No.  13,478;   Gartside  Coal  Co 

v.  Maxwell    22  Fed.  197.     But  see  Bigelow  v.  Gregory    73  111    m 
theenC  t"  °    ^  T  C°mPlete,y  °rganiZed  and   i-orporated   under 

comntroZ    »  T '^  aCt'  eXC6Pt  that  ^  haS  n°  Certificate  fro^  the 
comptroller  authorizing  it  to  act,  are  not  liable  as  copartners  on  a 

"Lrl:;  ^  *"  ^^  h™^™>  as  in  such  case  hey 
ration  dpg  ""  *****  °f  ^  aSSUmed  ^oration,  but  of  a  corpo 
rat.on  de  jure,  as  yet  powerless  to  make  a  lease.  Seeberger  v  Mc- 
Cormick,  178  111.  404,  53  N.  E.  340  Buerger  v.  Mc 

III'  m^f '  V'  RjChardS0D'    35   Ark-    144;    Bigelow  v.   Gregory,   73 

Iowa  f  4grAStT'  85  I1L  164;   KaiSer  V-  La™ce  Sav"  Bank, 
56  Iowa,  104,  41  Am.  Rep.  85,  8  N.  W.  772,  Mechem's  Cases   16-  Mont 

^ZJuZ  p8'  "8  MIT  249'  ^  N-  &  343:  Gle-  -  Bergmam/o 
fm      AI;  V-  ThaW'  72  M°-  446:  Martin  v.  Fewell    79  Mo 

401;    Abbott  v.  Omaha  S.   &  R.  Co.,  4   Neb.  416;    Lity  Ins    Co    v 

B^k'v  LndR  6?K;MHv    "  BeaCh'  12  N-  J-  Eq-  *  "  Sion 
Bank  v.  Landon,  45  N.  Y.  410;  Jessup  v.  Carnegie,  80  N.  Y  441-  Eliot 

v.  Himrod,  108  Pa.  569;  Smith  v.  Colorado  Fire  Ins.  Co.,  14  Fed    3  9 
attemrp0tntSoCaf:rnlnS  "  b"SineSS  ^  *  ^  ™™  *«**  an  a^ tte 

TZa:%Z\ZZ?on  are  liable  as  —  «— - 

'•"Guckert  v.  Hacke,  159  Pa.  303,  28  Atl    249 

171  Bates,  Partn.  §  8. 

'"Medill  v.  Collier,  16  Ohio  St.  599;    Second  Nat.  Bank  v.  Hall, 


G4  WHAT  CONSTITUTES  A  PARTNERSHIP. 

Knowledge  of  Lad-  of  Corporate  Existence. 

Persons  transacting  business  as  a  corporation^__birt_\vlio 
know  that  for  one  reason  or  "another" they  do  not  constitute  a 
"valid  corporation,  are  liable  as  partners.173  So,  where  they 
lmowingly  conduct  a  business  not  authorized  by  their  char- 
ter,171 or  continue  business  knowing  that  their  charter  has  ex- 
pired,175 they  will  be  held  liable  as  partners.  The  reason  for 
this  is  that,  where  they  know  that  they  are  not  a  corporation, 
it  is  clear  that  they  intended  to  carry  on  a  business  and  share 
the  i  noli  is  in  common,  and,  as  has  been  seen,  this  constitutes 
a  partnership. 

Partnership  as  to  Third  Persons. 

32.  Persons  not  really  partners  inter  se  may  incur  liability 
to  third  persons  as  though  they  were  partners. 

33.  This  liability  has  been  declared  in  two  classes  of  cases — 

(a)  Where  the  parties  have    shared  profits,  and 

(b)  Where  the  parties  have  held  themselves  out  as  part- 

ners. 

Same — By  Sharing  Profits. 

34.  B yjjie^grfiat  weight  of  modern  authority,  persons  who 

share  the  profits  of  a  business  are  not,  for  that  reason 
alone,  liable  as  partners  to  third  persons,  unless  they 
are  really  partners  inter  se. 

The  former  doctrine,  that  any  sharing  of  the  profits  of  a 
business  was  sufficient  to  fix  a  partnership  liability  upon  the 

35  Ohio  St.  158,  166;  Fuller  v.  Rowe,  57  N.  Y.  23.  The  liability  is 
in  tort  for  acting  as  agents  without  a  principal,  and  not  in  contract. 
Trowbridge  v.  Scudder,  11  Cush.  (Mass.)  83. 

its  Ridenour  v.  Mayo,  40  Ohio  St.  9;  Stafford  Nat.  Bank  v.  Palmer, 
47  Conn.  443.     See,  also,  Gartside  Coal  Co.  v.  Maxwell,  22  Fed.  197. 

i74Rianhard  v.  Hovey,  13  Ohio,  300;  Ridenour  v.  Mayo,  40  Ohio 
St.  9.    Contra,  Trowbridge  v.  Scudder,  11  Cush.  (Mass.)  83. 

»b  National  Union  Bank  v.  Landon,  45  N.  Y.  410. 


AS  TO  THIRD  PERSONS.  65 

persons  so  sharing  profits,  irrespective  of  their  actual  relation 
inter  se,  has  already  been  sufficiently  discussed.176  It  has 
also  been  seen  that,  since  the  decision  of  Cox  v.  Hickman,  this 
erroneous  doctrine  has  been  almost  completely  abandoned,  and 
now  persons  are  not  liable  as  partners,  although  they  share 
profits,  unless  they  really  are  partners.177  There  is  no  longer 
any  distinction  between  partnerships  inter  se  and  partner- 
ships as  to  third  persons.178 

Same — By  Holding  Out. 

35-     Whoever  knowingly  suffers  himself  to  be  represented 
as  a  partner  in  a  particular  firm  is  liable  as  a  partner,' 
upon  the  principle  of  estoppel,  to  any  one  who  has,  on 
the  faith  of  such  representation,  given  credit  to  the  firm.  " 

36.     No  one  is  liable  as  a  partner  upon  the  ground  of  holding 
out  Unless  two  things  concur,  viz. : 

(a)  The  holding  out  must  have  been  done  by  him  or  by  his 
consent,  and,  ""*"■ —  % 

(b)  The  holding  out  must  have  been  known  to  the  person 
seeking  to  avail  himself  of  it. 

37-     Holding  out  imposes  no  liability  for  torts. 

Although  it  is  an  erroneous  use  of  the  term  to  speak  of  a 
partnership  as  to  third  persons  where  there  is  no  partner- 
ship inter  se,  a  person  may  be  estopped  to  deny  the  fact  that 

"o  See  supra,  §  9,  "Former  Doctrine." 

m  See  supra,  §  10,  "Modern  Doctrine."  Without  a  contract  of 
partnership,  or  such  acts  and  declarations  as  lead  others  to  infer 
its  existence,  and  to  extend  credit  on  that  basis,  there  is  no  founda- 

^0nZhlf  Hability  a$  a  Partner  Can  rest     In  re  Gibb's  Estate, 
157  Pa.  59,  27  Atl.  383.   But  see  other  Pennsylvania  cases  cited  supra, 

1™"' Partnership'  is  a  relation  inter  se,  and  the  word  cannot    in 
strictness,  be  used  except  to  signify  that  relation."    Beecher  v.  Bush, 
5 


tV,  WHAT  CONSTITUTES  A  PARTNERSHIP. 

lie  la  a  partner.  "Where  a  man  holds  himself  out  as  a 
partner,  or  allows  others  to  do  it,  he  is  then  properly  estopped 
from  denying  the  character  he  has  assumed,  and  upon  the 
faith  of  which  creditors  may  be  presumed  to  have  acted.  A 
man  so  acting  may  be  rightly  held  liable  as  a  partner  by  estop- 
pel." l79  It  is  wholly  immaterial  whether  the  party  holding 
himself  out  as  a  partner  does  or  does  not  share  the  profits  or 
losses.180     Even  if  the  creditor  knows  that  the  real  partners 

45  Mich.  188,  7  N.  W.  785,  Mechem's  Cases,  86.  See,  also,  to  same 
effect,  the  remarks  of  Bramwell,  B.,  in  Bullen  v.  Sharp,  L.  R.  1 
C.  P.  86. 

i-o  Mollwo  v.  Court  of  Wards,  L.  R.  4  P.  C.  435.  See,  also,  Waugh 
v.  Carver,  2  H.  Bl.  235,  Burdick's  Cases,  47,  Mechem's  Cases,  67, 
wherein  the  court  said:  "Now  a  case  may  be  stated  in  which  it  is 
the  clear  sense  of  the  parties  to  the  contract  that  they  shall  not  be 
partners;  that  A.  is  to  contribute  neither  labor  nor  money,  and,  to 
go  still  further,  not  to  receive  any  profits.  But  if  he  will  lend  his 
name  as  a  partner  he  becomes,  as  against  all  the  rest  of  the  world, 
a  partner,  not  upon  the  ground  of  the  real  transaction  between 
them,  but  upon  principles  of  general  policy,  to  prevent  the  frauds 
to  which  the  creditors  would  be  liable  if  they  were  to  suppose  that 
they  lent  their  money  upon  the  apparent  credit  of  three  or  four  per- 
sons, when,  in  fact,  they  lent  it  only  to  two  of  them,  to  whom, 
without  the  others,  they  would  have  lent  nothing."  "A  nominal  part- 
ner, who  does  not  share  in  the  profits,  is  not  really  a  partner.  His 
liability  to  creditors  is  imposed  upon  him  by  law  upon  the  ground 
of  a  general  policy  to  preserve  good  faith  and  prevent  frauds  in 
business  transactions."  Oppenheimer  v.  Clemmons,  18  Fed.  888. 
See,  also,  Poole  v.  Fisher,  62  111.  181;  Kirk  v.  Hartman,  63  Pa.  97; 
Cook  v.  Penrhyn  Slate  Co.,  36  Ohio  St.  135;  Lancaster  Co.  Nat.  Bank 
v.  Boffenmyer,  162  Pa.  559,  59  Atl.  855;  Thomas  v.  Green,  30  Md.  1; 
De  Berkom  v.  Smith,  1  Esp.  29,  Ames'  Cas.  Partn.  138.  "A  partner- 
ship, as  regulating  the  relations  and  interests  of  the  members  among 
themselves,  is  not  the  same  as  a  partnership  formed  and  acting  as 
such  in  its  relations  to  others.  The  latter  may  exist  when  held  out 
to  the  world,  and  inviting  persons  to  deal  with  it,  when  the  asso- 
ciation among  the  members  may  not  be  a  partnership."  Day  v.  Ste- 
vens, 88  N.  C.  88. 

180  Pringle  v.  Leverich,  16  Jones  &  S.  (N.  Y.)  90;  Fisher  v.  Bowles, 
20  111.  396;  Ex  parte  Watson,  19  Ves.  461;  Kirkwood  v.  Cheetham,  2 
Fost.  &  F.  798. 


AS  TO  THIRD  PERSONS.  67 

liave  stipulated  to  indemnify  the  party  lending  his  name 
against  liability,  he  is  primarily  liable  to  the  creditor,  and 
must  seek  his  indemnity  from  those  who  promised  it.181 

The  question  of  the  effect  of  holding  oneself  out  as  a  part- 
ner cannot  be  raised  between  the  partners  themselves,  because 
everyone  is  presumed  to  know  who  are  his  associates  in  busi- 
ness.182 

Requisite  Character  of  the  Holding  Out. 

As  the  liability  in  this  class  of  cases  rests  upon  estoppel,  it 
is  obvious  that  a  person  cannot  justly  be  held  liable  unless  the 
holding  out  was  his  own  personal  act,183  or  unless  it  was  done 
with  his  knowledge  and  consent;  184  but  the  authority  or  con- 
sent to  a  holding  out  by  others  may  be  either  express  or  im- 
plied, and,  in  either  case,  liability  is  incurred.185     And  if 

!8i  Lindl.  Partn,  p.  41,  citing  Brown  v.  Leonard,  2  Chit.  120.  See, 
also,  supra,  §  19,  "Sharing  Profits  with  Stipulation  against  Losses." 
Alderson  v.  Popes,  1  Camp.  404,  note,  seems  to  hold  to  the  contrary, 
but  the  report  is  unsatisfactory,  and  the  case  has  been  criticised  by 
Lindley  (page  41). 

182  Freeman  v.  Bloomfield,  43  Mo.  391. 

i83Cassidy  v.  Hall,  97  N.  Y.  159;  Denithorne  v.  Hook,  112  Pa.  240, 
3  Atl.  777;  Bishop  v.  Georgeson,  60  111.  484;  Seabury  v.  Bolles,  51 
N.  J.  Law,  103,  16  Atl.  54;  Benjamin  v.  Covert,  47  Wis.  375,  2  N.  W. 
625;  De  Berkom  v.  Smith,  1  Esp.  29,  Ames'  Cas.  Partn.  138. 

is*  Nicholson  v.  Moog,  65  Ala.  471;  Bartlett  v.  Powell,  90  111.  33L; 
Wheeler  v.  McEldowney,  60  111.  358;  Fletcher  v.  Pullen,  70  Md.  205, 
16  Atl.  887,  Mechem's  Cases,  134;  Kritzer  v.  Sweet,  57  Mich.  617,  24 
N.  W.  764;  Rittenhouse  v.  Leigh,  57  Miss.  697;  Appeal  of  Scull,  115 
Pa.  141,  7  Atl.  588;  Ihmsen  v.  Lathrop,  104  Pa.  365.  See,  also,  cases 
cited  in  preceding  note.  A  person  cannot  be  made  a  partner  in 
fact,  or  appearance,  so  as  to  bind  him,  unless  by  his  consent,  ad- 
missions, or  acts.  The  declarations  or  acts  of  others  can  have  no 
such  effect  unless  authorized  or  ratified  by  him.  Bishop  v.  George- 
son,  60  111.  484. 

iss  Holland  v.  Long,  57  Ga.  36;  Hinman  v.  Littell,  23  Mich.  484; 
In  re  Jewett,  15  N.  B.  R.  126,  Fed.  Cas.  No.  7,306;  Thompson  v.  First 
Nat.  Bank,  111  U.  S.  529.  Consent  may  be  inferred  from  a  knowl- 
edge of  the  holding  out,  and  a  failure  to  take  any  steps  in  repudia- 


68  WHAT  CONSTITUTES  A  PARTNERSHIP 

there  has  been  in  fact  a  holding  out,  it  is  immaterial,  so  far 
as  liability  to  third  persons  is  concerned,  that  consent  to  snch 
holding  oui  was  obtained  by  fraud  or  promises  of  irresponsi- 
bility, provided  the  creditor  had  aothing  to  do  with  such  fraud 
or  promises  ls,:  _J  Yrhaps  the  mosl  comnion  ease  of  liahilil y  hy 
holding  out  is  where  a  retiring  partner  fails  to  give  notice  of 
his  retircmenl  from  the  firm.  In  such  a  ease,  he  is  usually 
held  liable  to  those  who  deal  with  the  firm  believing  hhn  still 
to  be  a  member.1*7  Where  the  business  is  continued  in  the 
old  name,  with  the  consent  or  acquiescence  of  the  retiring 
partner,  he  may  he  liahle  upon  the  ground  of  holding  out,  even 
though  a  notice  of  dissolution  was  published.188  But  the 
death  of  a  partner  ipso  facto  dissolves  a  partnership,  and  no- 
tice thereof  is  not  necessary  to  relieve  the  estate  of  the  de- 

tion  of  the  act.  Wright  v.  Boynton,  37  N.  H.  9;  Smith  v.  Hill,  45 
Vt.  90.  But  compare  Polk  v.  Oliver,  56  Miss.  566.  Knowledge  or 
consent  "may  he  inferred  from  circumstances,  such  as  advertise- 
ments, shop  bills,  signs,  or  cards,  and  from  various  other  acts,  from 
which  it  is  reasonable  to  infer  that  the  holding  out  was  with  his 
authority,  knowledge,  or  assent."  Fletcher  v.  Pullen,  70  Md.  205, 
16  Atl.  887,  Mechem's  Cases,  134. 

isoLindl.  Partn.  p.  42;  Collingwood  v.  Berkeley,  15  C.  B.  (N.  S.) 
145;  Maddick  v.  Marshall,  16  C.  B.  (N.  S.)  387;  Ellis  v.  Schmaeck, 
5  Bing.  521. 

is?  The  liability  of  retiring  partners  will  be  fully  considered  in  a 
subsequent  chapter.  See,  infra,  §§  118-122.  But  see,  in  this  con- 
nection, Scarf  v.  Jardine,  L.  R.  7  App.  Cas.  345,  Burdick's  Cases, 
101;  Newsome  v.  Coles,  2  Camp.  617;  Benjamin  v.  Covert,  47  Wis. 
375,  12  N.  W.  625.  Where  a  partnership  incorporates,  and  the  com- 
pany continues  to  use  the  firm  books,  and  continues  the  various  run- 
ning accounts  without  break,  it  is  estopped  to  set  up  the  incorpora- 
tion as  a  defense  against  one  who,  without  notice  of  the  change,, 
sells  it  goods,  and  charges  them  to  the  firm.  Reid  v.  F.  W.  Krel- 
ing's  Sons'  Co.,  125  Cal.  117,  57  Pac.  773. 

188  Fleming  v.  Dorn,  34  Ga.  213;  Wait  v.  Brewster,  31  Vt.  516. 
But  compare  Boyd  v.  McCann,  10  Md.  118,  wherein  it  was  held  that 
the  fact  that  the  firm  name  was  kept  over  the  door  of  the  place  of 
business  after  dissolution  of  the  partnership  is  not,  of  itself,  suffi- 
cient to  charge  the  retiring  partner. 


AS  TO  THIRD  PERSONS.  69 

ceased  partner  from  liability  on  contracts  made  by  the  surviv- 
ing partners,  even  though,  they  continue  the  business  in  the 
old  name.  The  doctrine  of  holding  out  has  never  been  applied 
to  such  a  case.189  A  representation  that  one  intends  to  be- 
come a  partner,  as  distinguished  from  a  representation  that 
noe  is  in  fact  a  partner,  does  not  impose  any  liability.190 
And  one  need  not  deny  an  unauthorized  announcement  that 
he  is  a  partner  190a  unless  the  circumstances  of  its  making  are 
such  that  good  faith  requires  him  to  speak.  A  person  may 
hold  himself  out  as  a  partner,  or  permit  others  to  do  so,  and 
yet  conceal  his  name.  Thus,  if  he  is  referred  to  as  a  partner 
who  does  not  wish  his  name  disclosed,  he  is  liable  as  a  part- 
ner.191 Whether  or  not  a  person  has  held  or  permitted  him- 
self to  be  held  out  as  a  partner  is  a  question  of  fact,  and  not 
of  law.192 

Creditor  s  Knowledge  of  Holding  Out. 

It  has  been  thought  that  a  person  holding  himself  out  as  a 
partner  is  liable  as  such  to  all  the  world,  irrespective  of 
whether  or  not  the  creditor  actually  knew  of  such  holding 

isoLindl.  Partn.  p.  47;  Webster  v.  "Webster,  3  Swanst.  490;  Dick- 
inson v.  Dickinson,  25  Grat.  (Va.)  321,  Mechem's  Cases,  374;  Mar- 
lett  v.  Jackman,  3  Allen  (Mass.)  287,  Burdick's  Cases,  547;  Caldwell 
v.  Stileman,  1  Rawle  (Pa.)   212. 

loo  Bourne  v.  Freeth,  9  Barn  &  C.  632.  Where  it  is  shown  that  a 
partnership  existed  between  three  persons,  and,  on  the  retirement 
of  one,  the  other  two  issued  a  statement  announcing  that  they 
would  continue  the  business,  and  they  did  so  through  the  same 
agencies,  and  with  unchanged  assets  and  liabilities,  such  statement 
and  course  of  dealing  are  sufficient  to  establish  the  existence  of  a 
partnership  between  them  as  to  the  property  and  business  of  the  old 
firm.     Earle  v.  Art  Library  Pub.  Co.,  95  Fed.  544. 

looaMunton  v.  Rutherford,  121  Mich.  41S,  80  N.  W.  112. 

loiMartyn  v.  Gray,  14  C.  B.  (N.  S.)  824;  Maddick  v.  Marshall,  16 
C.  B.   (N.  S.)   387. 

192  Seabury  v.  Bolles,  51  N.  J.  Law,  103,  16  Atl.  54.  Whether  a 
person  held  himself  out  as  a  partner  is  a  fact  to  be  ascertained  by 


70  WHAT  CONSTITUTES  A  PARTNERSHIP. 

out.198  I '-lit  this  view  ignores  the  fact  that  liability  by  hold- 
in  -■  <>ut  rests  upon  the  principle  of  estoppel,  and  that  estoppel 
in  turn  rests  upon  the  fact  that  one  lias,  by  his  conduct,  in- 
duced another  to  so  alter  his  position,  in  reliance  upon  certain 

the  jury  from  all  the  evidence  in  the  case.  Thomas  v.  Green,  30 
Mil.  1.  It  is  a  question  of  fact,  and  not  of  law.  Fletcher  v.  Pullen, 
70  Md.  205,  16  Atl.  887,  Mechem's  Cases,  134.  Different  juries  may 
come  to  different  conclusions  upon  the  same  evidence.  This  is  well 
illustrated  by  the  two  cases  of  Wood  v.  Duke  of  Argyll,  6  Man.  &  G. 
928,  and  Lake  v.  Duke  of  Argyll,  6  Q.  B.  477.  In  both  the  cases,  the 
same  acts  were  relied  on  to  constitute  a  holding  out,  but  in  one  the 
jury  found  that  there  had  been  a  holding  out,  and  in  the  other  that 
there  had  not,  and  in  both  cases  the  court  refused  to  set  aside  the 
verdict. 

A.  and  B.  were  partners.  They  agreed  with  C,  who  was  the  sales- 
man, to  associate  his  name  with  the  firm.  C.  was  to  receive  for  his 
services  at  the  rate  of  four  per  cent,  on  the  amount  of  cash  and 
credit  sales,  but  was  not  to  be  bound  for  the  debts  of  the  firm.  A  no- 
tice was  published,  in  a  newspaper  of  large  circulation,  that  C.  was 
to  have  an  interest  in  the  establishment.  It  was  held  that  this  was 
not  a  declaration  of  partnership,  and  did  not  make  C.  responsible 
for  the  debts  of  the  firm.  Vinson  v.  Beveridge,  3  MacArthur  (D.  C.) 
597.  Where  a  mercantile  agency,  in  behalf  of  a  subscriber,  obtained 
statements  from  the  person  inquired  about  that  he  was  a  partner 
in  a  certain  firm,  and  such  statements  were  sent  to  the  subscriber, 
who  relied  thereon,  and  extended  credit  to  the  firm,  a  jury  is  war- 
ranted in  finding  him  liable  as  a  partner.  Ellison  v.  Stuart,  2  Pen. 
(Del.)   179,  43  Atl.  836. 

Young  v.  Axtell,  cited  in  Waugh  v.  Carver,  2  H.  Bl.  242,  Bur- 
dick's  Cases,  47,  Mechem's  Cases,  67;  Mershon  v.  Hobensack,  22  N.  J. 
Law,  372;  Pringle  v.  Leverich,  16  Jones  &  S.  (N.  Y.)  90;  Poillon  v. 
Secor,  61  N.  Y.  456,  Ames'  Cas.  Partn.  147.  In  Poillon  v.  Secor,  61 
N.  Y.  456,  Ames'  Cas.  Partn.  147,  a  person  of  the  same  name  as  the 
retiring  partner  loaned  his  name  to  the  firm  for  a  consideration, 
and  the  business  was  continued  in  the  old  firm  name.  This  was 
held  to  render  such  person  liable  as  a  partner  to  a  creditor  who  did 
not  know  of  his  connection  with  the  firm,  and  who  had  not  relied 
upon  him.  The  court  said  that  the  estoppel  in  this  class  of  cases 
might  be  rested  upon  the  broad  ground  of  public  policy.  The  court 
expressly  approved  the  following  rule  stated  by  Mr.  Parsons:  "Where 
one  is  held  forth  to  the  world  as  a  partner,  the  first  question  is,  was 
he  so  held  out  by  his  own  authority,  assent,  or  connivance,  or  by 


AS  TO  THIRD  PERSONS.  71 

facts,  that  it  would  be  inequitable  to  allow  the  former  to  deny 
such  facts.  Where  the  creditor  did  not  know  of  the  holding 
out,  it  is,  of  course,  clear  that  he  did  not  extend  credit  or  alter 
his  position  in  reliance  upon  the  fact  of  partnership,  and  there 
is  therefore  no  reason  why  the  alleged  partner  should  be 
estopped  to  deny  that  fact.  Accordingly,  the  better  opinion 
is  that  a  person  held  out  as  a  partner  is  not  liable  as  such  ex- 
cept  to  those  who  knew  P^  ^mh.Mding1  QTlt  previously  to  giv- 
ing; crcl  it,  and  were  misled  thereby.104      Of  course  the  holding 

his  negligence?  If  by  his  authority,  consent,  or  connivance,  the 
presumption  is  absolute  that  he  was  so  held  out  to  every  customer 
or  creditor.  If  so  held  out  by  his  own  negligence  only,  he  should 
be  held  only  to  a  creditor  who  has  been  actually  misled  thereby." 
See,  also,  Pringle  v.  Leverich,  16  Jones  &  S.  (N.  Y.)  90. 

is*  Vinson  v.  Beveridge,  3  MacArthur  (D.  C.)  597;  Hefner  v. 
Palmer,  67  111.  161;  Sheldon  v.  Bigelow,  118  Iowa,  586;  Allen  v. 
Dunn,  15  Me.  292,  33  Am.  Dec.  614;  Wood  v.  Pennell,  51  Me.  52; 
Fletcher  v.  Pullen,  70  Md.  205,  16  Atl.  887,  Mechem's  Cases,  134; 
Rice  v.  Barrett,  116  Mass.  312;  Beecher  v.  Bush,  45  Mich.  188,  7 
N.  W.  785;  40  Am.  Rep.  465,  Mechem's  Cases,  86;  Kritzer  v.  Sweet, 
57  Mich.  617,  24  N.  W.  764;  Rimel  v.  Hayes,  83  Mo.  200;  Webster  v. 
Clark,  34  Fla.  637,  16  So.  601;  Parchen  v.  Anderson,  5  Mont.  438,  51 
Am.  Rep.  65;  Seabury  v.  Bolles,  51  N.  J.  Law,  103,  16  Atl.  54;  Cook 
v.  Penrhyn  Slate  Co.,  36  Ohio  St.  135;  Denithorne  v.  Hook,  112  Pa. 
240,  3  Atl.  777;  Pringle  v.  Leverich,  16  Jones  &  S.  (N.  Y.)  90;  Cas- 
sidy  v.  Hall,  97  N.  Y.  159;  Irvin  v.  Conklin,  36  Barb.  (N.  Y.)  64: 
Shafer  v.  Randolph,  99  Pa.  250;  Kirk  v.  Hartman,  63  Pa.  97;  Thomp- 
son v.  First  Nat.  Bank,  111  U.  S.  529,  Burdick's  Cases,  96;  Pott  v. 
Eyton,  3  C.  B.  32.    But  see  Smith  v.  Hill,  45  Vt.  90,  12  Am.  Rep.  189. 

"The  liability  in  such  a  case  rests  upon  the  principle  of  estoppel, 
that  by  holding  himself  out,  or  permitting  himself  to  be  held  out, 
as  a  partner,  he  has  induced  persons  dealing  with  the  partnership 
to  believe  him  to  be  a  partner,  and,  by  reason  of  such  belief,  to  give 
credit  to  the  person  so  held  out  as  a  member  of  the  firm.  As  the 
liability  in  such  a  case  rests  solely  upon  the  ground  that  one  can- 
not be  permitted  to  deny  a  partnership  relation  which,  though  not 
existing  in  fact,  he  has  asserted  or  permitted  to  appear  to  exist, 
there  is  no  just  foundation  for  holding  one  liable  as  a  partner  when 
in  fact  he  was  not  one,  although  held  out  as  such,  when  the  creditor 
did  not  know  of  the  holding  out,  and  did  not  act  upon  the  supposi- 


«L' 


WHAT  CONSTITUTES  A  PARTNERSHIP. 


ou1  may  be  under  such  circumstances  of  publicity  as  to  justify 
a  jury  in  finding  thai  the  creditor  knew  of  it,  and  acted  upon 
it.198  Unless  the  1  loL I  ing  out  occurred  prior  to  the  making  of 
the  contracl  in  suit,  there  is  uo  liability,  because  it  was  obvi- 

tion  that  the  person  sought  to  be  charged  was  a  partner  in  a  firm 
when  dealings  were  had  with  and  credit  given  to  said  firm.  The 
rule  is  correctly  stated,  we  think,  in  the  case  of  Thompson  v.  First 
Nat.  Bank,  111  U.  S.  529,  Burdick's  Cases,  96,  where  it  was  held 
that  a  person  who  is  not  actually  a  partner,  and  who  has  no  interest 
in  the  partnership,  cannot,  by  reason  of  having  held  himself  out 
to  the  world  as  a  partner,  be  held  liable  as  such  on  a  contract  made 
by  the  partnership  with  one  who  had  no  knowledge  of  the  holding 
out.  Wood  v.  Pennell,  51  Me.  52;  Cook  v.  Penryhn  Slate  Co.,  36  Ohio 
St.  135;  Hicks  &  Co.  v.  Cram,  17  Vt.  449;  Seabury  v.  Bolles,  51  N.  J. 
Law,  103,  16  Atl.  54.  In  this  connection  it  may  be  stated,  as  was  ob- 
served in  the  case  of  Thompson  v.  First  Nat.  Bank,  that  there  may 
be  cases  in  which  the  holding  out  has  been  public,  and  so  long  con- 
tinued that  a  jury  may  infer  that  one  dealing  with  the  partnership 
knew  it,  and  relied  upon  it,  without  direct  testimony  to  that  effect." 
Webster  v.  Clark,  34  Fla.  644,  16  So.  601. 

"In  Burgan  v.  Cahoon,  1  Pennypacker  (Pa.)  320,  it  was  said  by 
the  court  below,  and  affirmed  by  this  court,  that  'the  evidence  from 
which  you  would  have  to  find  that  he  has  so  held  himself  out  and 
acted  as  a  partner  must  be  his  acts  in  connection  with  the  circum- 
stances that  were  known  to  the  plaintiffffs  when  they  gave  him 
credit,  and  not  only  must  his  acts  have  been  such  as  to  justify  a 
reasonable  belief  that  he  was  a  partner,  but  to  hold  him  on  that 
account  you  must  further  find,  as  a  matter  of  fact,  that  they  gave 
him  credit  as  such,  because,  if  they  did  not,  his  holding  himself  out 
as  a  partner  would  do  them  no  harm.'  This  proposition  of  law  is 
accurately  stated  and  sustained  by  abundant  authority.  The  rule 
is  thus  given  in  1  Colly.  Partn.  §  19:  'No  person  can  be  fixed  with 
liability  on  the  ground  that  he  has  been  held  out  as  a  partner,  un- 
less two  things  occur,  viz.:  First,  the  alleged  act  of  holding  out 
must  have  been  done  either  by  him,  or  by  his  consent;  and,  secondly, 
it  must  have  been  known  to  the  person  seeking  to  avail  himself 
of  it.'  " 

''Webster  v.  Clark,  34  Fla.  644,  16  So.  601;  Thompson  v.  First 
Nat.  Bank,  111  U.  S.  530,  Burdick's  Cases,  96.  In  Dickinson  v.  Valpy, 
10  Barn.  &  Co.  140,  Lord  Wensleydale  said:  "If  it  could  have  been 
proved  that  the  defendant  held  himself  out  to  be  a  partner,  not  to 
the  world,  for  that  is  a  loose  expression,  but  to  the  plaintiff  him- 


AS  TO  THIRD  PERSONS.  73 

■ously  not  relied  upon.196  So,  where  the  creditor  knew  of  the 
holding  out,  but  also  knew  that  the  parties  were  not  partners, 
no  liability  as  such  exists.197 

self,  or  under  such  circumstances  of  publicity  as  to  satisfy  a  jury 
that  the  plaintiff  knew  of  it,  and  believed  him  to  be  a  partner,  he 
would  be  liable  to  the  plaintiff  in  all  transactions  in  which  he  en- 
gaged and  gave  credit  to  the  defendant  upon  the  faith  of  his  being 
a  partner."  See,  also,  opinion  of  Blackburn  in  Scarf  v.  Jardine,  7 
L.  R.  App.  Cas.  357,  Burdick's  Cases,  101.  Mere  proof  of  publication 
in  a  newspaper  is  not  sufficient  to  show  that  the  creditor  had  such 
knowledge  at  the  time  of  the  transaction.  Vinson  v.  Beveridge,  3 
MacArthur  (D.  C.)   597. 

A  witness  for  plaintiff  testified  that  there  was  a  sign  upon  the 
factory  of  the  company  which  read,  "Hall,  Nicoll  &  Granberry's  Fac- 
tory, Top  Floor."  There  was  no  proof  that  plaintiffs  ever  saw  or 
knew  of  the  sign,  or  that  any  reliance  was  placed  upon  it  when  their 
debt  was  contracted.  It  was  held  that  this  testimony  was  insuffi- 
cient to  authorize  a  recovery  against  said  defendants.  So,  also,  held 
as  to  declarations  of  one  of  the  defendants  to  customers,  referring 
to  the  factory  as  their  own,  and  speaking  of  its  work  as  work  they 
were  doing,  in  the  absence  of  evidence  that  it  was  known  to  or  re- 
lied upon  by  plaintiffs  when  they  sold  the  goods.  Cassidy  v.  Hall, 
97  N.  Y.  160. 

i9c  Howes  v.  Fisk,  67  N.  H.  289,  30  Atl.  351;  Baird  v.  Planque,  1 
Fost.  &  F.  344. 

i9"  Alderson  v.  Popes,  1  Camp.  404,  note,  Ames'  Cas.  Partn.  140; 
Krans  v.  Luthy,  56  111.  App.  506;  Booe  v.  Caldwell,  12  Ind.  12; 
Pratt  v.  Langdon,  97  Mass.  97.  But  see  Brown  v.  Leonard,  2  Chit. 
120,  Ames'  Cas.  Partn.  141,  wherein  the  plaintiff  had  notice  that 
one  partner  had  retired  from  the  firm,  but  that  his  name  was  to 
continue  in  the  firm  until  a  future  day.  Having  this  notice,  the 
plaintiff  became  the  holder  of  the  note  in  suit,  executed  in  the  firm 
name.  It  was  held  that  the  retired  partner  was  liable  upon  the 
note,  notwithstanding  the  notice  of  plaintiff,  upon  the  ground  that 
plaintiff  had  relied  upon  the  legal  responsibility  incurred  by  a  hold- 
ing out. 

When  a  third  party  has  notice  of  the  actual  agreement  existing 
between  those  who  hold  themselves  out  as  partners  without  being 
such,  he  is  bound  to  recognize  its  provisions,  and  if  by  them  there 
is  no  partnership  inter  sese,  they  are  no  longer  (after  such  notice) 
to  be  considered  as  partners  so  far  as  he  is  concerned.  Beudel  v. 
Hettrick,  3  Jones  &  S.    (N.  Y.)    405.     One  who  deals  with  persons 


74  WHAT  CONSTITUTES  A  PARTNERSHIP. 

Liability  for  Torts. 

The  doctrine  under  consideration  has  no  proper  application 
to  net  ions  of  tort  arising  from  the  negligent  conduct  of  the  al- 
leged  linn,  where  no  trust  has  been  put  in  it.198  But  disre- 
garding the  principle  of  estoppel,  which  is  the  foundation  of 
the  rule,  it  has  been  held  that  the  nominal  partner  is  liable 
even  in  cases  of  torts.199  Of  course,  if  the  nominal  partner 
participates  in  any  way  in  the  tort,  he  may  properly  be  held 
liable.  So,  where  the  tort  is  founded  upon  a  contract,  which 
contract  was  made  under  such  circumstances  of  holding  out 
as  to  bind  the  nominal  partner,  he  is  liable  in  an  action  sound- 
ing in  tort.200 

who  declare  themselves  partners,  and  so  conduct  themselves,  may 
hold  them  liable  as  partners,  even  though  he  has  notice  of  the  actual 
agreement  between  them.  He  is  not  bound,  at  his  peril,  to  put  a  cor- 
rect construction  upon  their  agreement,  different  from  that  which 
they  have  themselves  put  upon  it.    Stearns  v.  Haven,  14  Vt.  540. 

loaLindl.  Partn.  p.  47. 

wo  In  Stables  v.  Eley,  1  Car.  &  P.  614,  Ames'  Cas.  Partn.  142,  a  re- 
tired partner,  whose  name  had  been  permitted  to  remain  on  a  cart 
used  in  the  business,  was  held  liable  to  one  injured  by  the  negli- 
gence of  the  driver.  This  case  has  been  criticised  in  Lindl.  Partn. 
p.  47,  and  in  Bates,  Partn.  §  102.  See,  upon  the  general  principle  in- 
volved, the  following  cases,  none  of  which,  however,  were  partner- 
ship cases:  Robb  v.  Shephard,  50  Mich.  189,  15  N.  W.  76;  Jackson 
v.  Pixley,  9  Cush.  (Mass.)  490;  Hall  v.  White,  3  Car.  &  P.  136; 
Phillipsburgh  Bank  v.  Fulmer,  31  N.  J.  Law,  550. 

200  Sherrod  v.  Langdon,  21  Iowa,  518,  Burdick's  Cases,  112.  Where 
the  tort  consists  substantially  of  a  breach  of  a  contract  of  bailment, 
which  contract  was  made  under  such  circumstances  as  to  bind  the 
nominal  partner,  he  may  be  held  liable  in  an  action  of  tort.  Max- 
well v.  Gibbs,  32  Iowa,  32. 


i 


t.^r-j'^*^^ 


CHAPTER  II. 

CLASSIFICATIONS  AND  DEFINITIONS. 

38-40.  Partnerships  Classified. 

41.  Universal  Partnerships. 

42.  General  Partnerships. 

43.  Special  or  Particular  Partnerships. 

44.  Trading  and  Nontrading  Partnerships. 

45.  Partners  Classified. 

Partnerships  Classified. 

38.  Partnerships  classified  with  reference  to  the  nature  of 
the  association  are  either — 

(a)  Ordinary  partnerships, 

(b)  Limited  partnerships,  or 

(c)  Joint-stocK  companies. 

39.  Partnerships  classified  with  reference  to  their  extent  are 
either — 

(a)  Universal  partnerships, 

(b)  Gen|r5lT5al^erships,  or 

(c)  Special  or  particular  partnerships. 

40.  Partnerships  classified  wjth  reference  to  their  business 
are  either— 

(a)  Trading  partnerships,  or 

(b)  Nontrading  partnerships. 

Limited  Partnerships  and  Joint-Stock  Companies. 

The  definition,  nature,  and  incidents  of  limited  partner- 
ships and  joint-stock  companies  may  be  most  conveniently  ex- 


;,;  CLASSIFICATIONS  AND  DEFINITIONS. 

plained  after  a  consideration  of  ordinary  partnerships.    This 
Bubjecl  is  accordingly  reserved  for  a  later  chapter.1 


S  A  M  E UNIVERSAL    PARTNERSHIPS. 

41.     A  universal  partnership  is  one  in  which  the  parties 
bring  into  the  firm  "ailtneir  property,  of  whatever  nat- 

ure,    and    employ   all    their   services    for    the    common 
benefit. 

It  lias  been  said  that  there  is  probably  no  such  thing  in  fact 
as  a  universal  partnership,  in  the  sense  that  everything  done, 
bought,  or  sold  is  to  be  deemed  so  done  on  partnership  ac- 
count.2 Nevertheless  it  is  generally  conceded  that  such  a 
partnership  is  theoretically  possible,  and  several  cases  have 
occurred  which  were  practically  universal  partnerships.3 


Same — General  Partnerships. 
42.     A  generaLpartnership  is  one  formed  to  transact  some 


general  class  of  business. 


1 

A  general  partnership  is  one  whose  business  includes  all 
transactions  of  a  particular  class,  as  where  several  persons 
agree  to  carry  on  as  partners  the  business  of  bankers,  grocers, 
etc.     A  general  partnership  may,  of  course,  be  formed  to 

1  See  chapter  13,  "Limited  Partnerships,"  and  chapter  12,  "Joint- 
Stock  companies." 

2  Per  Story,  J.,  in  U.  S.  Bank  v.  Binney,  5  Mason,  176,  183,  Fed. 
Cas.  No.  16,791. 

3  See  Rice  v.  Barnard,  20  Vt.  479;  Gray  v.  Palmer,  9  Cal.  616; 
Lyman  v.  Lyman,  2  Paine,  11,  Fed.  Cas.  No.  8,628;  Gasely  v.  Sepa- 
ratists' Soc,  13  Ohio  St.  144;  Goesele  v.  Bimeler,  14  How.  (U.  S.) 
589;  Murrell  v.  Murrell,  33  La.  Ann.  1233;  Fuller  v.  Ferguson,  26 
Cal.  546. 


J/Plri  Au^u^^U  drb/f*«*s*£^-  ^  r^ 


PARTNERSHIPS  CLASSIFIED.  77 

carry  on  several  kinds  or  classes  of  business.  Some  of  the 
definitions  to  be  found  in  the  books  define  general  partner- 
ships in  terms  broad  enough  to  include  universal  partner- 
ships.4 But  the  above  definition  gives  the  correct  meaning  of 
the  term. 


Same — Special  ok  Particular  Partnerships. 

43.     A  special  or  particular  partnership  is  one  formed  for  a 
{    single  transaction. 

In  some  of  the  books,  the  term  "limited  partnerships"  has 
been  applied  to  partnerships  for  a  single  transaction.  This 
sense  of  the  term  must  not  be  confounded  with  the  modern 
statutory  limited  partnership,  which  of  course,  is  not  confined 
to  a  single  transaction.5 

*  See  Story,  Partn.  §  75,  and  see  comments  in  Bates,  Lim.  Partn. 
§  1.  "They  may  be  divided  into  general  and  special  or  limited  part- 
nerships. General  partnerships  are  properly  such  where  the  par- 
ties carry  on  all  their  trade  and  business  for  their  joint  benefit  and 
profit,  and  it  is  not  material  whether  the  capital  stock  be  limited 
or  not,  or  the  contributions  of  the  parties  be  equal  or  unequal." 
Bigelow  v.  Elliot,  1  Cliff.  32,  Fed.  Cas.  No.  1,399,  citing  Willet  v. 
Chambers,  Cowp.  814. 

5  See  post,  c.  13,  "Limited  Partnerships."  "Special  partnerships 
are  those  formed  for  a  special  or  particular  branch  of  business,  as 
contradistinguished  from  the  general  business  or  employment  of 
the  parties,  or  one  of  them.  When  they  extend  to  a  single  transac- 
tion or  adventure  only,  such  as  the  purchase  and  sale  of  a  particular 
parcel  of  goods,  they  are  more  commonly  called  "limited  partner- 
ships," but  the  appellation  is  indiscriminately  applicable  to  both 
classes  of  cases."  Bigelow  v.  Elliot,  1  Cliff.  32,  Fed.  Cas.  No.  1,399. 
To  constitute  a  general  partnership,  it  is  enough  that  the  parties 
agree  to  conduct  a  business,  and  to  share  its  profit  and  loss. 
Whether  the  business  is  of  a  general  nature,  or  is  confined  to  par- 
ticular transactions,  the  partnership  is  general.  Eldridge  v.  Troost,. 
3  Abb.  Prac.  (N.  S.;  N.  Y.)  20. 


78  CLASSIFICATIONS  AND  DEFINITIONS. 

Same — Trading  ami  \<>.vi  raping  Partnerships. 

44.     A   trading   or  commercial  partnership  is   one   whose 
business  consists  in  buying  or  preparing  for  sale  and 

selling  commodities  for 

If  it  does  not  buy  or  sell,  it  is  a  partnership  of  employment 
or  occupation,  and  not  a  trading  or  commercial  partnership.7 
Thus,  a  partnership  to  transact  the  business  of  running  a 
store,8  or  dealing  in  cattle,9  or  buying  and  killing  cattle,  and 
selling  the  meat,10  or  merchant  tailoring,11  is  a  trading  part- 
nership, while  a  partnership  between  attorney  a  for  the  prac- 
tice  of  the  lawT^or  between  mere  factors  and  brokers,13  or  a 
firm  ef  printers  and  publishers,14  is  a  nontrading  partnership." 

The  only  purpose  of  the  distinction  between  trading  ancT 
nontrading  partnerships  is  to  determine  how  far  a  partner 
has  implied  power  to  bind  his  firm  upon  commercial  paper, 
each  partner's  implied  power  being  limited  to  acts  within  the 
general  scope  or  course  of  the  partnership  business.  This 
subject  will  be  referred  to  again  in  a  succeeding  chapter.15 

e  Winship  v.  Bank  of  U.  S.,  5  Pet.  (U.  S.)  529;  Deitz  v.  Regnier, 
27  Kan.  94;  Lee  v.  First  Nat.  Bank,  45  Kan.  8;  Hoskinson  v.  Eliot, 
62  Pa.  393;  Smith  v.  Collins,  115  Mass.  388. 

I  Lee  v.  First  Nat.  Bank,  45  Kan.  8,  25  Pac.  196. 

s  Walsh  v.  Lennon,  98  111.  27;  Palmer  v.  Scott,  68  Ala.  380. 
»  Smith  v.  Collins,  115  Mass.  388. 
10  Wagner  v.  Simmons,  61  Ala.  143. 

II  Ah  Lep  v.  Gong  Choy,  13  Or.  205. 

12  Friend  v.  Duryee,  17  Fla.  Ill;  Smith  v.  Sloan,  37  Wis.  285; 
Pooley  v.  Whitmore,  10  Heisk.  (Tenn.)  629;  Hedley  v.  Bainbridge, 
2  Adol.  &  E.   (N.  S.)   316. 

13  Deardorf  s  Adm'r  v.  Thacher,  78  Mo.  128;  Third  Nat.  Bank  v. 
Snyder,  10  Mo.  App.  211. 

1*  Pooley  v.  Whitmore,  10  Heisk.   (Tenn.)   629. 

is  See  post,  c.  9,  "Rights  and  Liabilities  as  to  Third  Persons." 


PARTNERS  CLASSIFIED.  79 


Partners  Classified. 

45.     The  relation  of  a  partner  to  his  firm  or  to  third  persons 
is  often  indicated  by  designating  him  as — 

(a)  Ostensible. 

(b)  Secret.  ~~ 

(c)  Active. 
(d)S^ngt: 

(e)  Dormant. 

(f)  rTominal. 

(g)  Incoming, 
(h)  Retiring, 
(i)  liquidating, 
(j)  General, 
(k)  Special. 

Ostensible  Partners. 

An  ostensible  partner  is  one  who  is  held  out  and  known  as 
a  partner, — one  who  exhibits  himself  to  the  public  as  con- 
nected with  a  partnership,  and  interested  in  its  business. 

Secret  Partner. 

A  secret  partner  is  one  whose  relation  to  the  finn  is  con- 
cealed. 

Active  Partners. 

An  active  partner  is  one  who  takes  an  active  part  in  the 
conduct  of  the  firm  business.  He  may  be  either  a  secret  or  an 
ostensible  partner. 

Silent  Partners. 

A  silent  partner  is  one  who  takes  no  active  part  in  the  man- 
agement of  the  firm  business,  and  exercises  none  of  the  rights 
of  a  partner  beyond  receiving  his  share  of  the  profits.     He 


80  CLASSIFICATIONS  AND  DEFINITIONS. 

may  be  either  a  secret  or  an  ostensible  partner,  though  the 
term  is  sometimes  thoughl  to  apply  only  to  secret  partners. 

Dormant  Partners. 

A  dormant  partner  is  one  who  is  both  a  secret  and  silent 
partner.16     TTie~term  is  "often    used,  however,   as   meaning 


"•  Pars.  Partn.  §  31.  A  dormant  partner  takes  no  part  in  the  con- 
trol or  management  of  the  partnership  business.  Cochran  v.  Ander- 
son Co.  Nat.  Bank,  83  Ky.  44,  47.  A  dormant  partner  is  interested 
in  the  business  of  the  firm,  and  participates  in  the  profits,  but  is 
not  publicly  known  in  this  relation.  Oppenheimer  v.  Clemmons,  18 
Fed.  890;  Speake  v.  Prewitt,  6  Tex.  258.  A  dormant  partner  is  one 
whose  name  is  not  mentioned  in  the  title  of  the  firm,  or  embraced 
in  some  general  term,  as  "Company,"  "Sons,"  etc.  Jones  v.  Fegely, 
4  Phila.  (Pa.)  1. 

Where  the  firm  name  contains  the  suffix  "&  Co.,"  and  no  provis- 
ion is  made  in  the  partnership  articles  that  a  member  whose  name 
does  not  appear  shall  be  kept  secret,  and  in  fact  it  is  not  kept  se- 
cret, such  member  is  not  a  dormant  partner,  and,  upon  retiring,  he 
must  give  express  notice  to  firm  customers,  even  if  they  did  not  in 
fact  know  of  his  membership,  the  suffix  "&  Co."  indicating  an  un- 
disclosed principal.  Elmira  Iron  &  Steel  Rolling  Mill  Co.  v.  Harris, 
124  N.  Y.  280,  26  N.  E.  541,  Burdick's  Cases,  398. 

"A  dormant  partner  has  been  variously  defined  as  sleeping,  silent, 
not  known,  not  acting,  one  whose  name  and  transactions  as  a  part- 
ner are  professedly  concealed  from  the  world,  one  who  shares  in 
the  profits  of  a  business,  but  is  not  known  as  a  member  of  the  firm. 
In  its  strictest  sense,  it  may  imply  both  the  quality  of  secrecy  and 
inactivity,  but  it  has  been  held  that,  to  be  such,  it  is  not  essential 
that  the  dormant  partner  should  wholly  abstain  from  any  actual 
participation  in  the  business  of  the  firm,  or  be  universally  unknown 
as  bearing  a  connection  with  it.  He  may  act  in  an  advisory  man- 
ner in  the  general  business  of  the  firm,  and  it  is  sufficient  if  he  is 
not  generally  known  as  a  partner."  Elmira  Iron  &  Steel  Rolling 
Mill  Co.  v.  Harris,  124  N.  Y.  280,  26  N.  E.  541,  Burdick's  Cases,  398, 
citing  North  v.  Bloss,  30  N.  Y.  374.  A  dormant  partner  is  one  whose 
name  is  not  known  and  does  not  appear  as  that  of  a  partner,  but 
who  is  in  fact  a  silent  partner.  Podrasnik  v.  R.  T.  Martin  Co.,  25 
111.  App.  300.  A  partnership  is  dormant  when  the  name  or  names 
of  a  partner  or  partners  are  kept  back, — dormant  as  to  all  whose 
names  do  not  appear  in  its   transactions.     The  dormant,  sleeping,. 


PARTNERS  CLASSIFIED.  Si 

merely  a  secret  partner,  and  sometimes  as  meaning  a  silent  or 
inactive  partner,  irrespective  of  whether  he  is  an  ostensible  or 
secret  partner.  As  a  matter  of  fact,  there  is  much  confusion 
and  inaccuracy  in  the  use  of  the  terms  "secret,"  "silent,"  and 
"dormant."  17 

Nominal  Partners. 

A  nominal  or  quasi  partner  is  a  person  who  is  apparently 
) a  r tner,~  out  not  really  one.18 


Incoming  Partner. 

An  incoming  partner  is  one  who  enters  a  previously  exist- 
inglmn.  But,  as  will  be  seen  hereafter,  me  introduction  of  a 
new  member  into  an  existing  firm  operates  as  a  dissolution  of 
it,  and  the  institution  of  a  new  firm. 

Retiring  Partner. 

A  retiring  partner  is  one  who  leaves  an  existing  firm. 

Liquidating  Partner. 

A  liquidating  partner  is  the  member  of  a  dissolved  partner- 
ship who  winds  up  its  business. 

inactive  partner  may  be  known  by  reputation  or  declaration  of  his 
copartner,  but  these  do  not  make  him  an  avowed  or  active  one  with- 
out the  avowal  and  pledge  of  his  name  or  paper.  The  principle 
which  makes  a  dormant  partner  liable  is  that,  having  an  interest 
in  the  profits,  which  are  part  of  the  fund  to  which  a  creditor  looks 
for  payment,  he  shall  be  bound  for  claims  and  losses.  When  discov- 
ered, he  is  liable  as  a  partner;  but  then  he  must  be  shown  to  be  a 
partner  by  an  interest  in  the  subject-matter.  Winship  v.  Bank  of 
U.  S.  (1831),  5  Pet.  (U.  S.)   573-575,  Baldwin,  J. 

it  See  Pars.  Partn.  §  31. 

is  See  supra,  §§  32-37,  "Partnership  as  to  Third  Persons."  The 
term  "ostensible  partner"  has  been  used  in  the  sense  of  "nominal 
partner,"  and  vice  versa.  See  Harris  v.  Crary,  67  Tex.  383.  But  it 
is  better  to  confine  the  term  "ostensible"  to  one  who  is  really  a 
partner,  and  known  as  such,  and  to  apply  the  term  "nominal"  to 
one  who  is  not  really  a  partner,  but  only  apparently  so. 

6 


82  CLASSIFICATIONS  AND  DEFINITIONS. 

ml  and  Special  Partners. 
The  terms  "general"  and  "special"  partners  have  reference 
only  i"  the  members  of  a  statutory  limited  partnership,  and 
will  be  considered  in  that  connection.  The  terms  have  noth- 
ing  i"  do  with  the  classification  of  partnerships  into  general 
and  Bpecia]  partnerships. 


CHAPTER  III. 

CONTRACT  OF  PARTNERSHIP. 

46.  General  Requisites. 

47.  Formalities. 

48-49.    Who  may  become  Partners. 

50.  Consideration. 

51.  Purposes  of  Partnership. 

52.  Illegal  Partnerships. 

General  Requisites. 

46.  A  contract  creating  a  partnership  must  conform  to  all 
rules  governing  contracts  in  general". 

The  general  principles  of  the  law  of  contracts  are,  of 
course,  fully  applicable  to  contracts  of  partnership.  In  this 
work,  therefore,  it  is  unnecessary  to  do  more  than  point  out 
and  illustrate  a  few  of  the  applications  of  such  principles  to 
the  contract  of  partnership.  The  construction  of  contracts 
with  reference  to  the  question  whether  or  not  a  partnership  is 
created  has  been  sufficiently  considered  in  a  preceding  chap- 
ter, on  what  constitutes  a  partnership.  The  construction  of 
particular  provisions  in  formal  contracts,  or  articles  of  part- 
nership, is  reserved  for  a  later  chapter.1 

Formalities. 

47.  No  particular  forms  of  expression  or  formalities  of  exe- 
cutiojv^rj&necessary  to  a  valid'contract  Of  p&rtiifeiphfjT 

There  are  no  technical  terms  or  forms  of  expression  which 
must  be  used  to  order  to  constitute  an  ordinary  common  law 
partnership.     Any  contract  which  evinces  an  intention  to  be 

1  See  infra,  §§  82,  83. 


S4  CONTRACT  OF  PARTNERSHIP. 

joinl  proprietors  of  the  profits  of  the  business  to  be  carried 
on  will  constitute  a  partnership.  It  is  not  necessary  that 
•lie  term  "partnership,"  or  any  similar  term,  should  he  used.2 
[ndeed,  as  has  been  seen,  a  contract  may  create  a  partnership, 
though  the  parties  thereto  <li<l  not  contemplate  such  a  result, 
or  even  where  they  have  expressly  stipulated  that  a  partner- 
ship  sin .u  1<  1  not  result.8  The  contract,  of  course,  may  lie 
either  express,  or  implied  from  the  acts  of  the  parties.4 

ssity  of  Writing — Statute  of  Frauds. 
In  the  absence  of  a  statutory  provision  to  the  contrary,  the 
contract  may  be   either  oral   or   written.5     The   statute   of 
frauds,  which  requires  certain  classes  of  contracts  to  be  in 

2Bloomfield  v.  Buchanan,  13  Or.  108,  8  Pac.  912;  Marsh  v.  Davis, 
33  Kan.  326,  6  Pac.  612;  Johnson  v.  Carter,  120  Iowa,  355,  94  N.  W. 
850.  It  is  not  necessary  to  constitute  a  valid  partnership,  that  the 
parties  should  describe  themselves  as  partners,  or  that  they  should 
agree  to  share  the  losses.  Fay  v.  Waldron  (Sup.),  3  N.  Y.  Supp. 
894.  The  absence  of  the  word  "partners"  is  a  circumstance  to  be 
considered  in  determining  whether  or  not  the  parties  intended  to 
be  partners.    Rawlinson  v.  Clark,  15  Mees.  &  W.  292. 

3  See  supra,  §  13,  "Intention  the  Real  Test." 

*  A  partnership  is  a  voluntary  association  of  two  or  more  persons 
for  the  purpose  of  lawful  trade,  and  does  not  need  to  be  established 
by  demonstration.  It  may  be  inferred  from  facts  and  circumstances. 
Whiting  v.  Leakin,  66  Md.  255,  7  Atl.  688.  Where  there  is  no  writ- 
ten agreement,  the  question  of  partnership  or  not  is  to  be  deter- 
mined largely  by  other  conduct  of  the  parties.  Hayward  v.  Barron 
(Com.  PI.),  19  N.  Y.  Supp.  383.  No  express  stipulation  for  provid- 
ing the  profit  and  loss  is  necessary,  as  that  is  an  incident  to  the 
prosecution  of  a  joint  business.  Bancroft  v.  Hambly,  36  C.  C.  A. 
601.  "Though  there  be  no  express  articles  of  co-partnership,  the 
obligation  of  a  partnership  engagement  may  equally  be  implied  in 
the  acts  of  the  parties."  Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43 
Atl.  836.  "It  is  true  that  there  were  no  articles  of  partnership,  nor 
written  contract  defining  the  interests,  rights,  and  obligations  of 
the  parties,  but  they  are  not  essential  to  the  existence  of  a  partner- 
ship."    Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484. 

s  Jones  v.   Davies,  60  Kan.  309,  56  Pac.  484;   Marsh  v.  Davis,  33- 


FORMALITIES.  85 

writing,  does  not  require  a  written  contract  to  create  a  pres- 
ent partnership.  A  contract  of  partnership  is  not  an  agree- 
ment for  the  sale  of  any  personal  property  or  those  in  action, 
within  the  meaning  of  the  statute.6  The  provision  of  the 
statute  which  requires  contracts  not  to  be  performed  within 
a  year,  to  be  evidenced  by  a  note  or  memorandum  in  writing, 
of  course,  requires  a  contract  for  a  future  partnership  to  be 
in  writing,  where  such  partnership  is  not  to  commence  until 
after  a  year  from  the  date  of  the  contract.7  But,  as  has  been 
seen,  a  contract  for  a  future  partnership  does  not  constitute 
the  parties  partners  in  the  meanwhile.s  If  the  agreement  is 
for  a  partnership  for  a  longer  term  than  one  year,  the  con- 
tract must  be  evidenced  by  writing,  in  order  to  be  binding,9 

Kan.  326,  6  Pac.  612;  Randel  v.  Yates,  48  Miss.  685;  Bopp  v.  Fox,  63 
111.  543;  Smith  v.  Tarlton,  2  Barb.  Ch.  (N.  Y.)  336;  Ellison  v.  Stuart, 
2  Pen.  (Del.)  179,  43  Atl.  837;  Somerby  v.  Buntin,  118  Mass.  279; 
Simmons  v.  Ingram,  78  Mo.  App.  603;  McCabe  v.  Sinclair  (N.  J.  Eq.), 
58  Atl.  412. 

6  Coleman  v.  Eyre,  45  N.  Y.  38;  Huntley  v.  Huntley,  114  U.  S.  394. 
An  oral  agreement,  by  which  one  person  is  to  contribute  his  in- 
choate interest  in  an  invention,  and  the  other  furnish  the  money 
necessary  to  make  that  invention  available  in  the  form  of  a  patent, 
and  both  are  to  contribute  their  services  to  make  it  remunerative, 
is  an  agreement  for  a  partnership,  and  not  a  contract  for  the  sale 
of  goods,  wares  and  merchandise,  within  the  statute  of  frauds;  and 
the  patent,  when  obtained,  is  in  equity,  partnership  property,  in 
whosoever  name  letters  patent  are  taken  out.  Somerby  v.  Buntin, 
118  Mass.  279. 

7  Smith  v.  Tarlton,  2  Barb.  Ch.  (N.  Y.)  336.  See,  also,  Whipple 
v.  Parker,  29  Mich.  369.  "But  even  where  there  was  a  parol  agree- 
ment to  enter  into  a  partnership  at  a  future  day,  and  specifying  the 
terms  of  such  copartnership,  I  apprehend  that,  if  the  parties  went 
into  copartnership  at  the  prescribed  time,  without  agreeing  upon 
any  new  terms,  the  former  parol  agreement  would  be  presumed  to 
constitute  the  terms  on  which  such  partnership  was  entered  into 
and  carried  on."     Smith  v.  Tarlton,  2  Barb.  Ch.   (N.  Y.)   337. 

s  See  supra,  §  24,  "Contracts  for  Future  Partnerships." 
o  Jones  v.  McMichael,  12  Rich.    (S.  C.)    176;   Morris  v.  Peckham, 
51  Conn.  128;  Williams  v.  Jones,  5  Barn.  &  Co.  108. 


86  CONTRACT  OF  PARTNERSHIP. 

bul  it'  the  parties  have  acted  upon  the  agreement,  and 
launched  the  partnership,  they  are  partners,  though,  of  course, 
the  provision  of  the  oral  contract  thai  the  firm  shall  continue 
for  more  than  a  year  is  no1  binding,  and  the  firm  may  be  dis- 
solved al  any  time.10 

The  provision  of  ili<i  statute  of  frauds  requiring  contracts 
for  an  interest  in  real  property  to  be  evidenced  by  writing, 
dors  n,,!  require  a  contrad  of  partnership  to  be  in  writing, 
even  though  the  partnership  property  consists  of  realty,  and 
the  very  purpose  of  the  partnership  is  to  deal  in  real  estate.11 
The  great  weighl  of  authority  supports  this  view,  though 
there  are  authorities  to  the  contrary.12  So  far  as  lands  ac- 
quired after  the  formation  of  the  firm,  is  concerned,  the  in- 
terest of  each  partner  is  in  the  nature  of  a  resulting  or  con- 
structive trust,  and  it  is  well  settled  that  such  trusts  may  bo 
established  by  parol  evidence,13  the  statute  of  frauds  having 
no  application  to  such  trusts,  which  are  created  by  operation 

10  Morris  v.  Peckham,  51  Conn.  128;  Wahl  v.  Barnurn,  116  N.  Y. 
87,  22  N.  E.  280;  Huntley  v.  Huntley,  114  U.  S.  394. 

"Bopp  v.  Fox,  63  111.  540;  Fairchild  v.  Fairchild,  64  N.  Y.  471; 
Chester  v.  Dickerson,  52  Barb.  (N.  Y.)  349,  54  N.  Y.  1,  Mechem's 
Cases,  20;  Bates  v.  Babcock,  95  Cal.  479,  30  Pac.  605,  29  Am.  St.  Rep. 
133;  Flower  v.  Barnekoff,  20  Or.  132,  25  Pac.  370;  Allison  v.  Perry, 
130  111.  9,  22  N.  E.  492;  Carr  v.  Leavitt,  54  Mich.  540,  20  N.  W.  576; 
Richards  v.  Grinnell,  63  Iowa,  44,  18  N.  W.  668,  50  Am.  Rep.  727; 
Dale  v.  Hamilton,  5  Hare,  369;  Jones  v.  Davies,  60  Kan.  309,  56  Pac. 
484.  The  reason  assigned  in  many  cases  for  this  rule  is  that  real 
estate  is  treated  in  equity  as  personal  property  for  all  the  purposes 
of  the  partnership.     Flower  v.  Barnekoff,  20  Or.  132,  25  Pac.  370. 

i-' Raub  v.  Smith,  61  Mich.  543,  28  N.  W.  676;  Lefevre's  Appeal, 
69  Pa.  122;  Everhart's  Appeal,  106  Pa.  349;  Young  v.  Wheeler,  34 
Fed.  98;   Smith  v.  Burnham,  3  Sumn.  435,  Fed.  Cas.  No.   13,019. 

13  See  cases  cited  supra,  this  section,  to  the  effect  that  the  statute 
of  frauds  does  not  apply.  See,  also,  Forster  v.  Hale,  5  Ves.  309; 
Dale  v.  Hamilton,  5  Hare,  369,  2  Phil.  Ch.  266;  Lefevre's  Appeal,  69 
Pa.  125;  Williams  v.  Gillies,  75  N.  Y.  197;  Smith  v.  Tarlton,  2  Barb. 
Ch.  (N.  Y.)  336;  Sherwood  v.  St.  Paul  &  C.  Ry.  Co.,  21  Minn.  127; 
Marsh  v.  Davis,  33  Kan.  326,  6  Pac.  612. 


WHO  MAY  BECOME  PARTNERS.  87 

of  lay  mainly  for  the  prevention  of  fraud.  As  to  lands 
"which,  by  the  agreement,  are  to  be  contributed  by  one  or 
more  partners  to  the  common  stock  at  the  institution  of  the 
firm,  the  contract  is  executed  when  the  relation  is  entered 
into,  and  the  statute  of  frauds  has  no  application  to  executed 
agreements.14 


Who  May  Become  Paetnees. 

48.  Any  personcompetent  to  contract  may  make  a  valid 
contract  of  part.nt 

49.  There  must  be  at  least  two,  and,  in  the  absence  of  stat- 
ute, there  may  be  any  greater  number  of  partners  jp^a 

Aliens. 

Citizens  of  different  countries  which  are  at  peace  with  each 
other  may  be  partners,  but  an  alien  enemy  can  not  be  a  part- 
ner, and,  if  war  breaks  out  between  the  respective  countries 
of  the  partners,  such  partnership  is  suspended  or  dissolved.15 

"Hunter  v.  Whitehead,  42  Mo.  524;  Personette  v.  Pryme,  34  N.  J. 
Eq.  26.  In  Marsh  v.  Davis,  33  Kan.  326,  6  Pac.  612,  the  court  said  that 
it  was  immaterial  whether  real  estate  was  bought  with  partnership 
funds  for  partnership  purposes  after  the  formation  of  the  partner- 
ship, or  whether  a  part  of  the  real  estate  was  put  into  the  firm  as 
partnership  property  at  the  formation  of  the  firm,  if  the  parties  have 
acted  upon  the  agreement,  and  become  partners.  In  either  case, 
the  statute  of  frauds  is  not  applicable.  After  the  formation  of  the 
partnership,  an  action  between  the  partners  in  relation  to  such  lands 
would  be  founded  upon  an  existing  ownership  in  them,  and  not 
upon  the  contract  for  an  interest  in  them.  Before  the  formation  of 
the  firm,  the  only  action  that  could  be  brought  would  be  for  failure 
to  launch  the  partnership.    Pars.  Partn.   (4tb  Ed.)   §  6,  note  d. 

15  McAdams'  Ex'rs  v.  Hawes,  9  Bush  (Ky.)  15;  Woods  v.  Wilder, 
43  N.  Y.  164;  New  York  Life  Ins.  Co.  v.  Statham,  93  U.  S.  24;  Ker- 
shaw v.  Kelsey,  100  Mass.  561. 


CONTRACT  OF  PARTNERSHIP. 

Infants. 

An  infanl  may  be  a  partner,  since  his  contracts  are  merely 
voidable,  and  not  void.  So  long  as  he  does  not  avail  himself 
of  the  privilege  of  rescinding  his  contracts,  he  has  all  the 
rights  and  powers  of  any  other  partner.  He  may,  however, 
up  'ii  attaining  majority,  or  at  any  time  before,  rescind  the 
contract,  and  thus  escape  all  liability.  Upon  reaching  ma- 
jority, he  may  ratify  the  contract,  whereupon  he  becomes 
absolutely  liable  upon  all  the  contracts  of  the  firm.  If  he  in- 
tern!- to  disaffirm  the  contract,  he  should  do  so  promptly  upon 
arrival  at  majority,  as  otherwise  he  may  be  held  to  have 
elected  to  ratify  the  contract.10  The  infant's  interest  in  the 
fimi  property  remains  liable  for  firm  debts,  notwithstanding 
the  infant  elects  to  disaffirm,  and  thereby  escapes  personal 
liability.17  The  adult  partners  cannot  take  advantage  of 
their  copartner's  infancy  to  avoid  liability.  The  privilege 
is  personal  to  the  infant.18  But  the  fact  that  the  infant 
falsely  represented  himself  to  be  of  age  is  sufficient  to  entitle 
the  adult  partner  to  a  dissolution.19 

Insane  Persons. 

A  contract  of  partnership,  made  in  good  faith  with  an  in- 
sane person,  in  ignorance  of  his  condition,  is  valid,  though  it 
may  be  set  aside,  if  the  parties  can  be  placed  in  statu  quo.20 

10  Continental  Nat.  Bank  v.  Strauss,  137  N.  Y.  148,  32  N.  E.  1066, 
Burdick's  Cases,  619;  Osburn  v.  Fair,  42  Mich.  134,  3  N.  W.  299; 
Bush  v.  Linthicum,  59  Md.  344,  Burdick's  Cases,  154;  Bixler  v. 
Kresge,  169  Pa.  405,  32  Atl.  414,  47  Am.  St.  Rep.  920,  Burdick's  Cases, 
115;  Mehlhop  v.  Rae,  90  Iowa,  30,  57  N.  W.  650;  Vinsen  v.  Lockard, 
7  Bush  (Ky.)  458;  Goodnow  v.  Empire  Lumber  Co.,  31  Minn.  468, 
18  N.  W.  283. 

17  Bush  v.  Linthicum,  59  Md.  344,  Burdick's  Cases,  154;  Yates  v. 
Lyon,  61  N.  Y.  344;  Pelletier  v.  Couture,  148  Mass.  269,  19  N.  E.  400, 
and  cases  cited  supra,  this  section. 

is  Stein  v.  Robertson,  30  Ala.  286. 

19  Bush  v.  Linthicum,  59  Md.  344,  Burdick's  Cases,  154. 

soBehrens  v.  McKenzie,  23  Iowa,  333,  92  Am.  Dec.  428;    Fay  v. 


WHO  MAY  BECOME  PARTNERS.  89 

Insanity  of  a  partner  does  not  ipso  facto  operate  as  a  disso- 
lution of  the  firm,  though  it  may  constitute  sufficient  grounds 
to  justify  a  court  of  equity  in  decreeing  a  dissolution.21 

Married  Woman. 

At  common  law,  a  married  woman  was  incapable  of  enter- 
ing into  a  contract,  and  therefore  of  becoming  a  partner,  ex- 
where  she  had  a  separate  estate,  or  where  she  was  judicially 
separated  from  her  husband,  or  where  her  husband  was  an 
alien  enemy,  and  abroad.22  By  the  custom  of  London,  how- 
ever, a  married  woman  may  be  a  trader,  and  contract  as  if 
she  were  not  married,23  and  a  similar  custom  prevails  in 
South  Carolina.24  Under  modern  statutes,  which  have  very 
generally  removed  the  disabilities  of  married  women  to  con- 
tract, a  married  woman  may  be  a  partner,25  even  with  her 

Burditt,  81  Ind.  334,  42  Am.  Rep.  142;  Menkins  v.  Lightner,  18  111. 
282.    None  of  these  were  partnership  cases. 

2i  Raymond  v.  Vaughn,  17  111.  App.  144,  affirmed  in  128  111.  256, 
21  N.  E.  566. 

22  Enc.  Laws  Eng.  tit.  "Partnership,"  p.  458;  Brown  v.  Jewett,  18 
N.  H.  230;  McArthur  v.  Bloom,  2  Duer  (N.  Y.)  151.  A  married 
woman  has  not  capacity  to  enter  into  a  general  mercantile  partner- 
ship not  connected  with  or  relating  to  her  separate  property,  and 
where  she  assumes  to  do  so  with  the  consent  of  her  husband,  and  is 
by  him  assisted  in  managing  and  carrying  on  the  business,  the  hus-  / 
band,  and  not  the  wife,  is  to  be  regarded  in  law  as  the  partner. 
Swasey  v.  Antram,  24  Ohio  St.  87.  As  to  the  effect  of  a  partnership 
entered  into  during  coverture,  and  continued  after  the  death  of  the 
husband,  see  Everit  v.  Watts,  10  Paige,  Ch.  (N.  Y.)  82. 

23  Lindl.  Partn.  p.  77;  Beard  v.  Webb,  2  Bos.  &  P.  93. 
2*Newbiggin  v.  Pillans,  2  Bay   (S.  C.)    162;    Hobart  v.  Lemon,  3 

Rich.  (S.  C.)  131.  A  married  woman  may  become  a  feme  sole  trader 
in  the  business  of  keeping  a  boarding  house.  Dial  v.  Neuffer,  3  Rich. 
(S.  C.)  78. 

25  Vail  v.  Winterstein,  94  Mich.  230,  53  N.  W.  932;  Silveu's  Ex'rs 
v.  Porter,  74  Pa.  448;  Dupuy  v.  Sheak,  57  Iowa,  361,  10  N.  W.  731; 
Orr  v.  Cooledge,  117  Ga.  195,  43  S.  E.  527.  But  see  Vannerson  v. 
Cheatham,  41  S.  C.  327,  19  S.  E.  614,  wherein  it  is  held  that  a  statute 
providing  that  a  married  woman's  contracts  are  valid,  except  those 


90  CONTRACT  OF  PARTNERSHIP. 

husband,26  though  it  La  usually  held,  even  under  such  stat- 
utes, thai  she  cannot  enter  into  partnership  with  her  hus- 
band.27 In  a  recenl  and  well  considered  case,278,  a  distinc- 
tion is  made  between  statutes  allowing  married  women  to 
contract  generally  and  those  permitting  only  contracts  as  to 
separate  property.  Under  the  former  class  of  statutes,  the 
weighl  of  authority  is  in  favor  of  the  right  of  a  married  wo- 
man to  ciiirr  into  partnership  with  her  husband.27b 

( 'orporaiions. 

1 1  i-  prima  facie  ultra  vires  for  a  corporation  to  enter  into 
a  partnership  with  either  another  corporation  or  a  natural 
person,28  though  of  course  such  power  may  be  expressly  con- 
to  answer  for  the  liability  of  another,  does  not  authorize  her  to 
enter  into  a  partnership,  since  she  would  thereby  become  liable  to 
answer  for  the  liability  of  another.  This  decision  seems  extremely 
doubtful. 

2a  Suan  v.  Caffe,  122  N.  Y.  308,  25  N.  E.  488,  Mechem's  Cases,  40; 
Dressel  v.  Lonsdale,  46  111.  App.  454;  Louisville  &  N.  R.  Co.  v.  Alex- 
ander, 16  Ky.  L.  R.  306,  27  S.  W.  981;  Hoaglin  v.  Henderson,  119 
Iowa,  720,  61  L.  R.  A.  756.  In  England,  a  married  woman  with  a 
separate  estate  may  be  a  partner,  even  with  her  husband.  Butler 
v.  Butler,  16  Q.  B.  Div.  374. 

-'  Artman  v.  Ferguson,  73  Mich.  146,  40  N.  W.  907,  Mechem's  Cases, 
:;7;  Fuller  &  Fuller  Co.  v.  McHenry,  83  Wis.  573,  53  N.  W.  896;  Bow- 
ker  v.  Bradford,  140  Mass.  521,  5  N.  E.  480;  Plumer  v.  Lord,  5  Allen 
(Mass.)  460;  Payne  v.  Thompson,  44  Ohio  St.  192,  5  N.  E.  654;  Mayer 
v.  Soyster,  30  Md.  402. 

2?a  Hoaglin  v.  Henderson,  119  Iowa,  720,  61  L.  R.  A.  756. 

27b  Hoaglin  v.  Henderson,  supra;  Burney  v.  Savannah  Grocery 
Co.,  98  Ga.  711,  25  S.  E.  915;  Lane  v.  Bishop,  65  Vt.  575,  27  Atl.  499; 
Snell  v.  Stone,  23  Or.  327,  31  Pac.  663;  Fuller  v.  Ferguson,  26  Cal. 
547.  To  the  contrary,  see  Seattle  Board  of  Trade  v.  Hayden,  4  Wash. 
263,  16  L.  R.  A.  530;  Haggett  v.  Hurley,  91  Me.  542,  40  Atl.  561,  41 
L.  R.  A.  362. 

2sGunn  v  Central  R.  R.,  74  Ga.  509;  Aurora  State  Bank  v.  Oliver, 
62  Mo.  App.  390;  People  v.  North  River  Sugar  Refining  Co.,  121  N. 
Y.  582,  24  N.  E.  834;  New  York  &  S.  Canal  Co.  v.  Fulton  Bank,  7 
Wend.  (N.  Y.)  412;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa. 


WHO  MAY  BECOME  PARTNERS.  91 

f erred  by  its  charter.29  So,  a  corporation  may,  in  further- 
ance of  the  object  of  its  creation,  make  contracts,  though  the 
effect  of  the  contracts  may  be  to  impose  upon  the  company  the 
liability  of  a  partner.30 

Partnerships. 

A  firm  may  enter  into  a  contract  of  partnership  with  an- 
other firm,  or  with  an  individual,  and,  as  between  the  parties 
to  such  contracts,  in  taking  the  accounts,  making  contribu- 
tion and  distribution,  etc.,  the  contracting  firms  are  treated 
as  entities,  and  stand  on  the  footing  of  any  other  partner.31 
But,  as  the  law  does  not  in  fact  recognize  firms  as  legal  en- 
tities,32 all  the  partners  in  the  component  firms  will  be  re- 
garded as  partners  in  the  joint  firm,  so  far  as  third  persons 
are  concerned,  and  each  will  be  liable  in  soli  do  for  the  debts 
of  the  joint  firm.33 

Number  of  Partners. 

"That  a  partnership  must  consist  of  at  least  two  persons 
is  one  of  those  things  which  does  not  need  to  be  established 

173;  Mallory  v.  Hanaur  Oil-Works,  86  Tenn.  598,  8  S.  W.  396; 
Fechteler  v.  Palm  Bros.  &  Co.  (C.  C.  A.),  133  Fed.  462.  But  see 
Catskill  Bank  v.  Gray,  14  Barb.   (N.  Y.)   471. 

National  Bank  cannot  become  a  partner.  Merchants'  Nat.  Bank 
v.  Wehrmann,  69  Ohio  St.  160,  68  N.  E.  1004. 

29  Butler  v.  American  Toy  Co.,  46  Conn.  136;  Allen  v.  Woonsocket 
Co.,  11  R.  I.  288. 

'•o  Cleveland  Paper  Co.  v.  Courier  Co.,  67  Mich.  152,  34  N.  W.  556; 
Bissell  v.  Michigan  Southern  R.  Co.,  22  N.  Y.  258;  Catskill  Bank  v. 
Gray,  14  Barb.   (N.  Y.)  471;   Jones  v.  Parker,  20  N.  H.  31. 

si  Butler  v.  American  Toy  Co.,  46  Conn.  136;  In  re  Hamilton,  1 
Fed.  800;  Simonton  v.  McLain,  37  La.  Ann.  663;  Meador  v.  Hughes, 
14  Bush.  (Ky.)  652;  Bullock  v.  Hubbard,  23  Cal.  495;  Gulick  v. 
Gulick,  14  N.  J.  Law,  582;  North  Pac.  Lumber  Co.  v.  Spore,  44  Or. 
462,  75  Pac.  890. 

32  See  infra,  c.  4,  "Firm  as  an  Entity." 

33  Meyer  v.  Krohn,  114  111.  574,  581,  2  N.  E.  495;  Beall  v.  Lowndes, 
4  S.  C.  258. 


92  CONTRACT  OF  PARTNERSHIP. 

by  demonstration."84  In  the  absence  of  statute,  there  is  no 
limit  upon  the  number  of  persona  who  may  be  partners  in  a 
single  firm.88 

Consideration. 

50.  The  mere  agreement  of  one  person  to  be  a  partner  with 
another  is  a  sufficient  consideration  for  the  agreement 
of  such  other  to  be  a  partner  with  him  upon  whatever 
terms  may  be  agreed  upon." 

A  contract  of  partnership  must,  of  course,  be  supported  by 
a  sufficient  consideration.86  But,  as  mutual  promises  are 
each  a  sufficient  consideration  for  the  other,  the  mere  agree- 
ment of  one  person  to  be  a  partner  with  another  is  a  sufficient 
consideration  for  the  agreement  of  the  other  to  be  a  partner 
with  him  upon  whatever  terms  may  be  agreed  upon  between 
them.87  An  agreement  to  be  a  partner  subjects  one  to  the  ex- 
tensive liabilities  of  a  partner  and  is  a  valuable  consideration, 
"Any  contribution  in  the  shape  of  capital  or  labor,  or  any  act 
which  may  result  in  liability  to  third  persons,  is  a  sufficient 
consideration  to  support  such  an  agreement."38  The  contri- 
butions need  not  be  equal,  for  the  court  will  not  measure  flic 
quantum  of  value,  but  will  leave  the  parties  to  determine  this 
for  themselves.39  The  mere  agreement  of  several  persons  to 
be  partners  is  a  sufficient  consideration  to  support  a  stipula- 
tion that  some  of  them  shall  stand  the  greater  part  or  all  of 
the  losses.40 

■■>  Whiting  v.  Leakin,  66  Md.  255,  7  Atl.  688. 

"•->  Pars.  Partn.  §  14. 

Mitchell  v.  O'Neale,  4  Nev.  504. 

37  Coleman  v.  Eyre,  45  N.  Y.  38;  Belcher  v.  Conner,  1  S.  C.  88; 
Breslin  v.  Brown,  24  Ohio  St.  565;  Kimmins  v.  Wilson,  8  W.  Va. 
584.     But  see  Mitchell  v.  O'Neale,  4  Nev.  504. 

88Lindl.  Partn.  p.  63. 

30  Per  Wigram,  V.  C,  in  Dale  v.  Hamilton,  5  Hare,  393. 

loLindl.  Partn.  p.  63;   Geddes  v.  Wallace,  2  Bligh,  270.     But  see 


PURPOSES  OF  PARTNERSHIP.  9& 

Premium. 

Sometimes  it  is  agreed  that  a  person  shall  pay  a  sum  of 
money  for  the  privilege  of  being  admitted  as  a  partner  in  nn 
established  business.  This  sum  is  called  a  premium  or 
bonus,  and  belongs  individually  to  the  prior  owner  of  the 
business.  In  forms  no  part  of  the  firm  assets.  In  cases  of 
fraud,  and  toTal  or  partial  failure  of  consideration,  the  prem- 
ium may  be  recovered  or  apportioned.41 

Purposes  of  Partnership. 

51.     In  the  absence  of  statute,  a  partnership  may  be  formed 
to  transact  any  lawful  business  for  profit. 

It  has  already  been  seen  that  associations  not  having  gain 
for  their  object  are  not  partnerships.42  The  purpose  of 
every  partnership  must  therefore  be  the  transaction  of  some 
business  for  profit.  A  partnership  may  be  formed  for  the 
purpose  of  any  lawful  business,  commercial  or  otherwise,  such 
as  farming,  mining,  manufacturing,  professional  occupations, 
and  the  like.  It  may  exist  for  a  single  transaction  or  under- 
taking,43 though  this  has  been  denied.44     Though  at  one  time 

Brophy  v.  Holmes,  2  Molloy,  1.  The  admission  of  a  new  partner  into 
an  existing  firm  is  sufficient  consideration  to  support  an  agreement 
by  the  incoming  partner  to  assume  existing  firm  debts.  Pars.  Partn. 
§  336. 

«  See,  generally,  Lindl.  Partn.  p.  64,  and  Pars.  Partn.  §  418. 

42  See  supra,  §  235. 

43  Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484;  Spencer  v.  Jones,  92 
Tex.  516,  50  S.  W.  118;  Yeoman  v.  Lasley,  40  Ohio  St.  190;  Hulett 
v.  Fairbanks,  40  Ohio  St.  233;  Winstanley  v.  Gleyre,  146  111.  27,  34  N. 
E.  628;  Plunkett  v.  Dillon,  4  Houst.  (Del.)  338.  To  constitute  a 
partnership,  it  is  not  necessary  that  there  be  a  series  of  transactions 
between  the  parties,  nor  that  the  relation  be  continued  for  a  long 
period  of  time.  It  may  exist  for  a  single  transaction  or  undertak- 
ing.    Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484. 

44  Carter  v.  Carter,  28  111.  App.  340;  Hurley  v.  Walton,  63  111.  260. 


94  CONTRACT  OF  PARTNERSHIP. 

doubted,  it  is  now  settled  that  a  partnership  may  be  formed 
for  the  purpose  of  buying  and  selling  real  estate.45 

Same — Illegal  Partnerships. 

52.     A  partnership   cannot  be  created  for  a  purpose  pro- 
hibited by  positive  law  or  public  policy. 

A  contract  of  partnership  for  any  purpose  prohibited  by 
la  w  or  public  policy  is  void.46  Thus,  a  partnership  for  the 
purpose  of  smuggling,  gambling,  making  counterfeit  money, 
aiding  alien  enemies,  regulating  prices,  stifling  competition, 

"The  agreement  here  contemplated  nothing  but  a  single  transaction, 
in  the  profits  of  which  the  parties  were  jointly  interested.  Nothing 
was  to  be  bought  by  the  parties;  they  were  to  incur  no  expenses  or 
debts;  they  were  merely  to  perform  a  particular  service  with  refer- 
ence to  a  single  subject,  and  share  the  profit.  The  elements  neces- 
sary to  constitute  a  'partnership,'  in  the  legal  sense  of  that  term, 
are  wholly  lacking,  where  the  transaction  engaged  in  is  but  a  single 
adventure,  in  which  there  is  no  property,  and  no  element  of  loss." 
Gottschalk  v.  Smith,  54  111.  App.  344,  citing  Hurley  v.  Walton,  63  111. 
260;  Fawcett  v.  Osborn,  32  111.  411;  Adams  v.  Funk,  53  111.  219; 
Snell  v.  DeLand,  43  111.  323.  The  principal  case  was  affirmed  in  156 
111.  377,  40  N.  E.  937,  holding  that  an  agreement  by  two  persons  to 
obtain  from  a  third  person  a  price  for  which  he  will  sell  his  land, 
and  to  jointly  and  separately  exert  themselves  to  sell  such  land  at 
an  enhanced  price,  and  divide  the  profit  between  them,  embracing 
no  other  transaction,  does  not  constitute  a  partnership. 

45  Bates  v.  Babcock,  95  Cal.  479,  30  Pac.  605;  Winstanley  v.  Gleyre, 
146  111.  27,  34  N.  E.  628;  Holmes  v.  McGray,  51  Ind.  358;  Richards 
v.  Grinnell,  63  Iowa,  44,  18  N.  W.  668;  Pennypacker  v.  Leary,  65 
Iowa,  220,  21  N.  W.  575;  Corey  v.  Cadwell,  86  Mich.  570,  49  N.  W. 
611;  Simpson  v.  Tenney,  41  Kan.  561,  21  Pac.  634;  Hunter  v.  White- 
head, 42  Mo.  524;  Chester  v.  Dickerson,  54  N.  Y.  1,  Mechem's  Cases, 
20;  Yeoman  v.  Lasley,  40  Ohio  St.  190;  Hulett  v.  Fairbanks,  40  Ohio 
St.  233;  Flower  v.  Barnekoff,  20  Or.  132,  25  Pac.  370;  Spencer -v. 
Jones,  92  Tex.  516,  50  S.  W.  118;  Canada  v.  Barksdale,  76  Va.  899; 
Sage  v.  Sherman,  2  N.  Y.  417.  But  see  Patterson  v.  Brewster,  4  Edw. 
Ch.  (N.  Y.)   352. 

*cMcGunn  v.  Hanlin,   29  Mich.  476;    Fairbank  v.  Leary,  40  Wis. 


PURPOSES  OF  PARTNERSHIP.  95 

and  the  like,  is  illegal  and  void.47  Partnerships  in  public 
offices  are  against  public  policy. 4S  Where  only  some  of  the 
partnership  purposes  or  transactions  are  illegal,  if  this  part 
can  be  separated  from  the  legal  part,  the  partnership  is  not 
wholly  void,  but  if  the  two  parts  can  not  be  separated,  the 
whole  is  void.49 

Effect  of  Illegality. 

The  courts  Avill  not  assist  the  members  of  an  illegal  part- 
nership in  any  way  to  enforce  or  carry  out  their  illegal  ob- 
jects. A  suit  for  an  accounting  of  the  partnership  business 
cannot  be  maintained.50  Where  the  business  has  all  been 
wound  up,  it  has  been  held  that  a  partner  may  maintain  an  ac- 

637;  Kelly  v.  Devlin,  58  How.  Prac.  (N.  Y.)  487;  Dunham  v.  Presby, 
120  Mass.  285. 

«  Powell  v.  Maguire,  43  Cal.  11;  Craft  v.  McConoughy,  79  111.  346, 
Mechem's  Cases,  30;  Tenney  v.  Foote,  95  111.  99;  Watson  v.  Murray, 
23  N.  J.  Eq.  257;  Gaston  v.  Drake,  14  Nev.  175;  Davis  v.  Gelhaus, 
44  Ohio  St.  69,  4  N.  E.  593;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co., 
68  Pa.  173. 

•is  Caston  v.  Drake,  14  Nev.  175;  Woodworth  v.  Bennett,  43  N.  Y. 
273;  Forsyth  v.  Woods,  11  Wall.  (U.  S.)  484;  Bowen  v.  Richardson, 
133  Mass.  293;  Warner  v.  Griswold,  8  Wend.  (N.  Y.)  665;  Hobbs  v. 
McLean,  117  U.  S.  567;  Wolcott  v.  Gibson,  51  111.  69. 

49  Anderson  v.  Powell,  44  Iowa,  20;  Northrup  v.  Phillips,  99  111. 
449;  Harvey  v.  Varney,  98  Mass.  118;  Dunham  v.  Presby,  120  Mass. 
285;  Lane  v.  Thomas,  37  Tex.  157;  Willson  v.  Owen,  30  Mich.  474. 
See,  also,  Central  Trust  &  Safe  Deposit  Co.  v.  Respass,  112  Ky.  606, 
56  L.  R.  A.  479,  where  illegal  items,  for  betting,  were  separated  in 
the  accounting  of  a  partnership  for  feeding,  training  and  racing 
horses. 

so  Sykes  v.  Beadon,  11  Ch.  Ch.  170;  Jackson  v.  McLean's  Ex'rs, 
100  Mo.  130;  Snell  v.  Dwight,  120  Mass.  9;  Bartle  v.  Nutt,  4  Pet. 
(U.  S.)  184;  Woodworth  v.  Bennett,  43  N.  Y.  273,  Mechem's  Cases, 
25;  Read  v.  Smith,  60  Tex.  379.  Where  the  partnership  was  a  legal 
one,  the  mere  fact  that  a  portion  of  the  profits  were  derived  by  cheat- 
ing customers  will  not  deprive  a  partner  of  his  right  to  an  account. 
Todd  v.  Pennington  (N.  J.  Ew.  &  App.)  21  Atl.  297;  Shriver  v.  Mc- 
Cloud,  20  Neb.  474.     But  compare  Northrup  v.  Phillips,  99  111.  449. 


90  CONTRACT  OF  PARTNERSHIP. 

tion  !«>  recover  his  share  of  the  assets  remaining  in  the  hands 
of  his  copartner,51  but  the  weight  of  authority  is  to  the  con- 
trary.56 As  to  third  persons  not  connected  with  the  illegality, 
the  members  of  an  illegal  partnership  are  liable  as  any  other 
partner-. 

si  Brooks  v.  Martin,  2  Wall.  (U.  S.)  70;  Attaway  v.  Third  Nat. 
Bank,  15  Mo.  App.  577;  McGunn  v.  Hanlin,  29  Mich.  476;  Crescent 
Ins.  Co.  v.  Bear,  23  Fla.  50. 

6  2Tood  v.  Rafferty's  Adm'rs,  30  N.  J.  Eq.  254;  Wood  worth  v.  Ben- 
nett, 43  N.  Y.  273;  Patterson's  Appeal,  13  W.  N.  C.  (Pa.)  154;  Hunter 
v.  Pfeiffer,  108  Ind.  197,  9  N.  E.  124;  Tenney  v.  Foote,  95  111.  99; 
Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  173. 


CHAPTER  IV. 

FIRM  AS  AN  ENTITY. 

53.     At  Common  Law. 
54-55.     Limited  Recognition  as  an  Entity. 

At  Commox  Law. 

53.     At  common  law,  a  firm  is  not  recognized  as  a  legal 
pn^Y_fj^Tt  f£Qrn  ^F^^^^Frs^iio  compose  it. 

Everyone  is  familiar  with  the  legal  fiction  by  which  a  cor- 
poration is  regarded  as  a  legal  person  or  entity  separate  and 
distinct'  from  its  members  or  stockholders.  The  property, 
rights,  duties,  and  obligations  of  a  corporation  are  not  the 
property,  rights,  duties  and  obligations  of  the  stockholders. 
With  a  partnership,  the  case  is  exactly  reversed.  The  firm, 
as  such,  is  not  regarded  as  having  any  legal  existence1  apart 
from  the  members  who  compose  it.  "What  is  called  the  prop- 
erty of  the  firm  is  the  property  of  the  individual  partners.2 

1  Jacaud  v.  French,  12  East,  317;  Bank  of  Toronto  v.  Nixon,  4  Ont. 
App.  346;  Ex  parte  Corbett,  14  Ch.  Div.  122,  Burdick's  Cases,  134; 
Hoare  v.  Oriental  Bank,  2  App.  Cas.  589;  In  re  Wakeham,  13  Q.  B. 
Div.  43;  Jones  v.  Blun,  145  N.  Y.  333,  39  N.  E.  954.  "There  is  no  such 
thing  as  a  firm  known  to  the  law."  Per  James,  L.  J.,  in  Ex  parte 
Corbett,  14  Ch.  Div.  122,  Burdick's  Cases,  134.  In  Louisiana,  which 
derives  its  jurisprudence  from  the  civil  law,  a  partnership  is  rec- 
ognized as  a  separate  legal  entity.  Succession  of  Pilcher,  39  La.  Ann. 
362,  1  So.  929;  Liverpool,  B.  &  R.  P.  Nav.  Co.  v.  Agar,  14  Fed.  615. 

2  "Partnership  is  but  a  relation.  It  is  not  a  person;  it  is  not  a 
legal  being.  The  real  owners  of  partnership  property  are  the  part- 
ners."    Harris  v.  Visscher,  57  Ga.  232.     A  legacy  to  a  firm  belongs 

7 


98  FIRM  AS  ENTITY. 

What  are  called  debts  of  the  firm  are  the  debts  of  the  part- 
ners.8 Actions  to  vindicate  the  rights  of  the  firm  must  he 
broughl  by  the  individual  partners,  for  such  rights  are  their 
rights.4  The  firm,  as  such,  can  not  sue.5  Actions  to  en- 
\''>vcr  firm  liabilities  must  be  brought  against  the  individuals 
composing  the  firm,  for  it  is  the  individual  partners,  and  not 
the  firm,  which  is  liable.6  A  partner  may  be  a  debtor  or 
creditor  of  his  copartners,  but  he  cannot,  in  strictness,  be  a 
debtor  or  creditor  of  the  firm.7  The  firm  is  not  such  a  legal 
entity  as  may  be  either  a  debtor  or  a  creditor.     Any  change 

to  the  individuals  composing  the  firm  at  the  time  the  legacy  vests. 
Stuhbs  v.  Sargon,  2  Keen,  255.  Firm  property  may  be  seized  on 
execution  for  the  private  debt  of  a  partner,  because  it  is,  in  part, 
at  least,  his  property.     See  infra,  c.  7. 

s  The  private  property  of  a  partner  may  be  seized  on  execution  for 
a  firm  debt,  because  it  is  the  debt  of  such  partner.     See  infra,  c.  7. 

*  See  infra,  c.  10,  "Actions." 

c  By  statutes  in  some  states,  firms  are  authorized  to  sue  and  be 
sued  in  their  firm  name.     See  infra,  c.  10. 

«  See  infra,  c.  10,  "Actions." 

-  Richardson  v.  Bank  of  England,  4  Mylne  &  C.  171,  172;  De  Tastet 
v.  Shaw,  1  Barn.  &  Aid.  664.  A  debt  between  the  firm  and  a  partner 
cannot  be  legally  enforced  until  the  partnership  affairs  are  settled. 
It  is  merely  an  item  in  the  partnership  accounts,  and  can  be  en- 
forced against  the  other  partners  only  upon  final  settlement.  See 
infra,  c.  10,  "Actions."  "But  though  these  terms,  'creditor'  and 
'debtor,'  are  so  used,  and  sufficiently  explain  what  is  meant  by  the 
use  of  them,  nothing  can  be  more  inconsistent  with  the  known  law 
of  partnership  than  to  consider  the  situation  of  either  party  as  in 
any  degree  resembling  the  situation  of  those  whose  appellation  has 
been  so  borrowed.  The  supposed  creditor  has  no  means  of  com- 
pelling payment  of  his  debt;  and  the  supposed  debtor  is  liable  to  no 
proceedings  either  at  law  or  in  equity — assuming  always  that  no 
separate  security  has  been  taken  or  given.  The  supposed  creditor's 
debt  is  due  from  the  firm  of  which  he  is  a  partner,  and  the  supposed 
debtor  owes  the  money  to  himself,  in  common  with  his  partners, 
and,  pending  the  partnership,  equity  will  not  interfere  to  set  right 
the  balance  between  the  partners.  Indeed,  it  could  not  do  so  with 
effect,  inasmuch  as,  immediately  after  a  decree  has  enforced  pay- 
ment of  the  money  supposed  to  be  due,  the  party  paying  might,  in 


AT  COMMON  LAW.  99 

in  membership  destroys  the  identity  of  the  firm,  and,  if  the 
business  is  carried  on,  the  partners  are  regarded  as  constitut- 
ing a  new  firm.8  This  nonrecognition  of  the  firm  as  a  legal 
person  or  entity  is  one  of  the  most  marked  differences  be- 
tween partnerships  and  corporations.9 


Limited  Recognition  as  an  Entity. 

54.  For  convenience,  where  only  the  collective  rights  and 
liabilities  of  all  the  partners  need  be  considered,  the 
firm  may  be,  and  is,  treated  as  a  legal  entity. 

55.  To  a  limited  extent,  statutes  in  some  states  deal  with  a 
firmaTa  legaTentltjr: 

Notwithstanding  the  nonrecognition  of  the  firm  as  a  dis- 
tinct legal  entity,  it  is  highly  convenient,  if  not  indispensible, 
for  many  purposes,  to  personify  the  firm,  and  this  is  not  im- 
proper. In  thinking  and  speaking,  it  is  usual,  whenever  the 
collective  rights  and  liabilities  of  the  partners  is  the  only  im- 
mediate thing  that  need  be  considered,  to  use  the  terms 
"firm"  or  "the  partnership"  as  a  symbol  to  designate  the  ag- 
gregate whole,  as  distinguished  from  the  individual  partners. 
After  the  rights, and  liabilities  of  the  "firm"  as  an  aggrega- 
tion or  "entity"  are  determined,  it  is  easy  to  interpret  the  re- 
sult in  terms  of  individual  rights  and  liabilities,  if  necessary. 
In  other  words,  the  notion  of  the  firm  as  an  entity  performs 
much  the  same  office  in  law  and  business  as  algebraic  symbols 
do  in  mathematics.  It  is  merely  a  convenient  mode  of  ex- 
pression, which  simplifies  business  operations  and  legal  rea- 

exercise  of  his  power  of  a  partner,  repossess  himself  of  the  same 
sum."    Richardson  v.  Bank  of  England,  4  Mylne  &  C.  171. 

s  See  infra,  c.  11,  "Dissolution."  See  Abat  v.  Penny,  19  La.  Ann. 
289;   Haskins  v.  D'Este,  133  Mass.  356,  Burdick's  Cases,  135. 

0  Lindl.  Partn.  p.  112. 


100  FIRM  AS  ENTITY. 

soning.10  Accordingly,  we  find  courts  and  lawyers,  as  well 
as  business  men,  frequently  speakig  of  a  firm  as  a  entity,  hav- 
ing its  own  property  creditors,  and  the  like,"  bul  this  is  only 
in  the  sense  just  explained,  and  means  no  more  than  that  the 
partners,  as  Buch,  have  certain  special  rights  and  liabilities^ 
which  must  be  worked  out  through  their  partnership  rela- 
tion.1- In  keeping  partnership  accounts,  or  in  marshalling 
assets  of  an  insolvent  firm,  it  is  constantly  regarded  as  an  en- 
tity.13  Business  men  generally  regard  a  firm  as  an  entity, 
much  as  the  law  regards  a  corporation,  and,  for  this  reason, 
the  view  that  a  firm  is  an  entity  is  often  called  the  "mercan- 
tile/' as  distinguished  from  the  "legal,"  view. 

Statutory  Recognition  of  Firm  as  Entity. 

The  tendency  of  legislation  and  decision  is  in  the  direction 
of  a  wider  recognition  of  the  character  of  the  firm  as  an  en- 
tity. Statutes  in  many  states  permit  firms  to  sue  and  be 
sued  in  the  firm  name.     Property  of  the  firm  is  sometimes 

10  In  Pooley  v.  Driver,  5  Ch.  Div.  460,  Sir.  George  Jessel,  speaking 
of  the  partners  as  agents,  said:  "You  cannot  grasp  the  notion  of 
agency,  properly  speaking,  unless  you  grasp  the  notion  of  the  exist- 
ence of  the  firm  as  a  separate  entity  from  the  existence  of  the  part- 
ners." 

ii  Walker  v.  Wait,  50  Vt.  668;  Curtis  v.  Hollingshead,  14  N.  J. 
Law,  403,  Burdick's  Cases,  285;  In  re  Haine's  Estate,  176  Pa.  354, 
35  Atl.  237;  Burdick's  Cases,  482;  Meily  v.  Wood,  71  Pa.  488;  Cross 
v.  Burlington  Nat.  Bank,  17  Kan.  336;  Robertson  v.  Corsett,  39  Mich. 
777;  Fitzgerald  v.  Grimmell,  64  Iowa,  261,  20  N.  W.  179;  Henry  v. 
Anderson,  77  Ind.  361. 

i2Meehan  v.  Valentine,  145  U.  S.  611,  623,  Burdick's  Cases,  80, 
Mechem's  Cases,  103;  Bank  of  Buffalo  v.  Thompson,  121  N.  Y.  280, 
24  N.  E.  473,  Burdick's  Cases,  286. 

is  Jones  v.  Blun,  145  N.  Y.  333,  39  N.  E.  954;  In  re  Haine's  Estate, 
176  Pa.  354,  35  Atl.  237,  Burdick's  Cases,  482.  In  keeping  partner- 
ship accounts,  the  firm  is  made  debtor  to  each  partner  for  what  he 
brings  into  the  stock,  and  each  partner  is  made  debtor  to  the  firm 
for  all  that  he  takes  out  of  the  stock.    Lindl.  Partn.  p.  110. 


LIMITED  RECOGNITION. 


101 


assessed  for  taxation  as  that  of  the  firm,  instead  of  as  that  of 
the  individual  members.  Chattel  mortgages  executed  by  a 
firm  may  be  filed  at  its  principal  place  of  business.14 


i4  Paige,  Cas.  Partn.  p.  Ill,  note;  Hubbardston  Lumber  Co.  v. 
Covert,  35  Mich.  255;  Robinson  v.  Ward,  13  Ohio  St.  293;  Williams 
v.  City  of  Saginaw,  51  Mich.  120,  16  N.  W.  260;  Stockwell  v.  In- 
habitants of  Brewer,  59  Me.  286;  Hoadley  v.  County  Commissioners, 
105  Mass.  519. 


CHAPTER  V. 

FIRM  NAME  AND  GOOD  WILL. 

56.     Necessity  of  Firm  Name. 
57-58.     Use  and  Purpose  of  Firm  Name. 
59-60.     What  Name  may  be  Adopted. 

Necessity  of  Firm  Name. 
56.     It  is  not  necessary  that  a  firm  should  have  a  firm  name. 

Although  persons  forming  a  partnership  usually  adopt  a 
firm  name  under  which  to  transact  the  partnership  business, 
it  is  not  at  all  essential  that  they  should  do  so.  A  partner- 
ship may,  and  frequently  docs,  exist  and  do  business  with- 
out any  firm  name.1  The  law  frequently  declares  persons 
to  be  partners  as  the  legal  result  of  a  contract  between  them, 
although  they  had  not  supposed  that  they  were  partners,  and, 
of  course,  had  not  adopted  a  firm  name.2  As  has  been  seen, 
the  firm  is  not  an  entity,  but  its  property  and  business  is  the 
property  and  business  of  the  individuals  who  compose  it. 
There  is,  therefore,  nothing  to  prevent  the  partners  from 
transacting  the  partnership  business  in  their  own  individual 
names,  if  they  see  fit.3 

1  Ontario  Bank  v.  Hennessey,  48  N.  Y.  545;  Haskins  v.  D'Este,  133 
Mass.  356,  Burdick's  Cases,  135;  Kitner  v.  Whitlock,  88  111.  513; 
Pursley  v.  Ramsey,  31  Ga.  403;  Meriden  Nat.  Bank  v.  Gallaudet,  120 
N.  Y.  298,  24  N.  E.  994;  Johnson  v.  Carter,  120  Iowa,  355,  94  N.  W. 
850. 

-  See  chapter  1,  "What  Constitutes  a  Partnership." 

3  McGregor  v.  Cleveland,  5  Wend.  (N.  Y.)  475;  Kitner  v.  Whitlock, 


USE  AND  PURPOSE  OF.  103 


Use  and  Purpose  of  Firm  Name. 

57.  A  firm  name  is  used  as  a  convenient  symbol  to  desig- 
nate all  the  partners  collectively,  and  show  that  the 
transaction  was  intended  as  a  firm,  and  not  an  individ- 
ual, transaction. 

58.  Where  there  is  a  firm  name,  it  should  be  used  in  all  the. 
business  transactions  of  the  firm  except — 

Exception — Conveyances  of  real  property. 

Although  a  partnership  may  exist  without  a  firm  name, 
even  where  there  are  formal  articles  of  partnership,  the  con- 
venience of  having  a  firm  name-  is  so  great  as  to  be  almost  a 
necessity.  The  convenience,  if  not  the  necessity,  of  consider- 
ing the  firm  as  an  entity  for  certain  purposes,  has  already 
been  pointed  out.  The  firm  name  is  the  symbol  of  this  no- 
tional  enjity.4  As  a  general  rule,  where  a  firm  name  has 
Been  adopted,  all  the  partnership  business  may  and  should  be 
transacted  in  the  firm  name.  The  use  of  a  firm  name  raises 
a  prima  facie  presumption  that  there  is  a  partnership,  and 
that  the  transaction  was  a  partnership  transaction.5     Con- 

88  111.  513;  Getchell  v.  Foster,  106  Mass.  42;  Austin  v.  Williams,  2 
Ohio,  61;  Crozier  v.  Kirker,  4  Tex.  252,  51  Am.  Dec.  724. 

*  The  firm  name  is  simply  a  convenient  abbreviation  of  the  indi- 
vidual names  of  all  the  partners,  and,  when  used,  has  the  same  ef- 
fect as  if  no  firm  name  had  been  adopted,  and  the  name  of  each 
partner  had  been  signed  in  full  as  a  partner.  Haskins  v.  D'Este, 
133  Mass.  356,  Burdick's  Cases,  135. 

"Haskins  v.  D'Este,  133  Mass.  356,  Burdick's  Cases,  135;  Ferris 
v.  Thaw,  5  Mo.  App.  279;  Whitlock  v.  McKechnie,  1  Bosw.  (N.  Y.) 
427;  Armstrong  v.  Robinson,  5  Gill  &  J.  (Md.)  412;  Charman  v. 
Henshaw,  15  Gray  (Mass.)  293.  But  compare  Brennan  v.  Pardridge, 
67  Mich.  449.  But  in  Robinson  v.  Magarity,  28  111.  423,  it  was  held 
that  there  is  no  presumption  that  a  firm  name  includes  more  than 
one  person.    The  signing  of  the  firm  name  to  a  promissory  note  by 


104  FIRM  NAME. 

veyances  of  real  property  constitute  a  notable  exception  to 
this  rule.  "The  Legal  title  to  real  estate  can  beheld  only  by 
a  person  or  a  corporate  entity  which  is  deemed  such  in  law; 
and  therefore  a  partnerrship  can  not,  as  such,  take  and  hold 
such  Legal  title."8  Bu1  "where  the  style  of  a  partnership  is 
inserted  as  grantee,  ami  it  contains  the  name  or  names  of 
one  or  more  of  the  partners,  there  is  no  reason  why  the  title 
should  no1  vest  in  the  partners  so  named,  and  the  authorities 
are  to  the  effect  that  it  would."7  Of  course,  such  partner 
would  hold  the  title  in  trust  for  the  benefit  of  all  the  partners. 
Ordinarily,  where  the  partners  have  adopted  a  firm  name, 
one  partner  has  no  power  to  bind  the  firm  by  contracts  exe- 
cuted in  any  other  name;8  but  if  all  the  partners  join  in  the 
contract,  they  may  bind  the  firm  in  their  idividual  names, 
even  though  there  is  a  firm  name,9  and  perhaps  even  one  part- 

a  member  of  the  firm  makes  the  note  prima  facie  the  note  of  the 
co-partnership,  and  binds  all  the  members  of  the  firm.  Lamwersick 
v.  Boehmer,  77  Mo.  App.  136.  An  estimate  submitted  for  a  public 
contract  purported  by  its  title  to  be  made  by  W.  &  D.,  under  the 
name  and  style  of  "D.,  W.  &  Co."  It  was  subscribed  by  each  in- 
dividual name,  and  also  by  the  firm  name.  It  was  held  that  it  was 
to  be  treated  as  a  partnership  act,  and  not  as  that  of  individual  part- 
ners. People  v.  Croton  Aqueduct  Board,  5  Abb.  Prac.  (N.  Y.)  316, 
6  Abb.  Prac.  (N.  Y.)  42,  26  Barb.  (N.  Y.)  240. 

eGille  v.  Hunt,  35  Minn.  357,  29  N.  W.  2;  Adams  v.  Church,  42 
Or.  270,  70  Pac.  1037,  95  Am.  St.  Rep.  740.  See,  also,  Tidd  v.  Rines, 
26  Minn.  201,  2  N.  W.  497. 

i  Gille  v.  Hunt,  35  Minn.  357,  29  N.  W.  2.  See,  also,  chapter  7, 
"Partnership  Property." 

s  Gordon  v.  Bankard,  37  111.  147;  Tilford  v.  Ramsey,  37  Mo.  563; 
Kirby  v.  Hewitt,  26  Barb.  (N.  Y.)  607;  Palmer  v.  Stephens,  1  Den. 
(N.  Y.)  471;  McLinden  v.  Wentworth,  51  Wis.  170,  8  N.  W.  118,  192; 
Clark  v.  Houghton,  12  Gray  (Mass.)  38.  A  receipt  signed  by  one 
partner  in  his  own  name  is  binding  upon  the  firm.  Byington  v. 
Gaff,  44  111.  510;  Brown  v.  Lawrence,  5  Conn.  397;  Bisel  v.  Hobbs. 
6  Blackf.  (Ind.)  479.  The  execution  of  a  mortgage  of  personal  prop- 
erty of  a  partnership  by  one  partner  in  his  individual  name  passes 
no  title.    Clark  v.  Houghton,  12  Gray  (Mass.)   38. 

oKitner  v.  Whitlock,  88  111.  513;  Iddings  v.  Pierson,  100  Ind.  418; 


USE  AND  PURPOSE  OF.  105 

ner  could  bind  the  firni  by  signing  the  true  names  of  all  the 
partners.10  Where  there  is  no  firm  name,  it  is  not  necessary 
to  use  the  names  of  all  the  partners,  for  a  principal  is  bound 
by  contracts  made  in  the  name  of  the  agent.11  A  partner 
may  use  his  own  name,  and  bind  the  firm,12  though,  in  such 
a  case,  the  contract  would  be  prima  facie  the  individual  con- 
tract of  such  partner,  and  it  would  have  to  be  shown  that  it 
was  a  partnership  matter,  in  order  to  bind  the  firm,  whereas, 
if  a  firm  name  had  been  used,  the  contract  would  have  been 
prima  facie  a  firm  obligation.13  Any  name  will  bind  the 
firm,  where  it  appears  that  such  was  the  intention.14  A  part- 
nership may  have  several  names,  in  which  case  it  is  bound  by 
contracts  made  in  either  name.15     The  fact  that  the  same  per- 

McGregor  v.  Cleveland,  5  Wend.  (N.  Y.)  475;  Patch  v.  Wheatland, 
8  Allen  (Mass.)  102;  Crouch  v.  Bowman,  3  Humph.  (Tenn.)  209; 
Grollman  v.  Lipsitz,  43  S.  C.  329,  21  S.  E.  272. 

io  Per  Maule,  J.,  in  Norton  v.  Seymour,  3  C.  B.  794.  In  McGregor 
v.  Cleveland,  5  Wend.  (N.  Y.)  475,  F.  C.  and  R.  C.  being  in  partner- 
ship, F.  made  a  note  signing  it  "F.  C.  and  R.  C,"  coupling  the  two 
names  together.  This  was  held  sufficient,  as  a  partnership  signature, 
to  bind  R.,  there  being  no  proof  as  to  what  was  the  style  of  their 
firm,  except  that  in  two  instances  the  name  of  "F.  &  R.  C."  was  used. 

n  See,  also,  infra,  this  section. 

12  Sage  v.  Sherman,  2  N.  Y.  417;  Ontario  Bank  v.  Hennessey,  48 
N.  Y.  545.  The  firm  is  bound  where  a  partner  signs  his  own  name, 
and  adds  the  suffix  "&  Co."  Austin  v.  Williams,  2  Ohio,  61;  Drake 
v.  Elwyn,  1  Caines  (N.  Y.)  184.  See,  also,  Baring  v.  Crafts,  9  Mete. 
(Mass.)    380. 

i3  Macklin's  Ex'r  v.  Crutcher,  6  Bush  (Ky.)  401.  See,  also,  supra, 
this  section. 

Where  a  note  is  executed  by  and  in  the  name  of  one  partner,  if 
the  lender  did  not  know  of  the  partnership,  or  if  the  money  was 
loaned  on  the  individual  credit  of  the  maker  of  the  note,  the  fact 
that  the  money  was  applied  to  the  business  of  the  firm  does  not  make 
it  a  firm  debt.    National  Bank  v.  Ingraham,  58  Barb.  (N.  Y.)   290. 

i*  Holland  v.  Long,  57  Ga.  36;  Brown  v.  Pickard,  4  Utah,  292; 
Kinsman  v.  Castleman,  1  T.  B.  Mon.  (Ky.)  210. 

is  Hunt  v.  Semonin,  79  Ky.  270;  Moffat  v.  McKissick,  8  Baxt. 
(Tenn.)  517;  Michael  v.  Workman,  5  W.  Va.  391.  See,  also,  Mc- 
Gregor v.  Cleveland,  5  Wend.  (N.  Y.)  475. 


10G  FIRM  NAME. 

sons,  as  partners,  conduct  their  business  at  different  places 
under  different  names,  does  not  constitute  them  partners  in 
different  firms.  The  partners  are  the  firm,  and  they  are 
hound  by  contracts  in  either  name.10  So,  by  consent  or  by 
acquiescence  in  the  use  of  a  name  other  than  the  one  origin- 
ally adopted,  a  partner  may  be  authorized  to  bind  the  firm 
in  such  manner.17  Where  the  firm  has  received  the  benefit 
of  a  contract  made  on  its  credit,  it  is  bound,  no  matter  what 
name  is  used.18 

What  Name  May  be  Adopted. 

59.  In  the  absence  of  statutory  regulation,  the  partners  may 
adopt  any  name  they  see  fit  as  a  firm  name. 

60.  In  several  states,  statutes  exist  regulating,  to  some  ex- 

tent,  the  use  of  firm  names. 

In  Absence  of  Statute. 

Unless  restained  by  statute,  the  partners  may  adopt  any 
name  they  please  as  a  firm  name.19     The  name  is  wholly  a 

10  Campbell  v.  Colorado  Coal  &  Iron  Co.,  9  Colo.  60;  "Wright  v. 
Hooker,  10  N.  Y.  51;  Anderson  v.  Norton,  15  Lea  (Tenn.)  14;  In  re 
Williams,  3  Woods,  493,  Fed.  Cas.  No.  17,707. 

1- Palmer  v.  Stephens,  1  Den.  (N.  Y.)  471;  Mifflin  v.  Smith,  17 
Serg.  &  R.  (Pa.)  165;  Williamson  v.  Johnson,' 1  Barn.  &  C.  146;  Folk 
v.  Wilson,  21  Md.  538. 

is  Miner  v.  Downer,  20  Vt.  466;  Macklin's  Ex'r  v.  Crutcher,  6  Bush. 
(Ky.)  401;  Morse  v.  Richmond,  97  111.  303;  Bancroft  v.  Haworth, 
29  Iowa,  462;  Farmers'  Bank  v.  Bayliss,  41  Mo.  274;  Weaver  v.  Tap- 
scott,  9  Leigh  (Va.)  424.  It  is  bound  by  a  contract  made  in  the 
name  of  one  partner,  if  the  credit  was  extended  tto  the  firm  and  not 
solely  to  such  partner.  Van  Reimsdyk  v.  Kane,  1  Gall.  630,  Fed. 
Cas.  No.  16,872.  So,  it  is  bound  where  the  partner  signs  his  own 
name,  with  the  addition  of  "as  trustee,"  to  an  authorized  contract. 
Morse  v.  Richmond,  97  111.  303. 

10  Manhattan  Brass  &  Mfg.  Co.  v.  Sears,  45  N.  Y.  797;  Crawford  v. 
Collins,  45  Barb.  (N.  Y.)  269;  Nichols  v.  White,  41  Hun  (N.  Y.)  152; 


WHAT  MAY  BE  ADOPTED.  Iu7 

matter  of  convention.20  It  may  be  a  purely  fanciful  name.21 
It  may  contain  some  or  all  of  the  names  of  the  actual  part- 
ners, or  it  need  not  contain  any,  or  it  may  contain  the  names 
of  persons  who  are  not  partners.22  The  name  of  one  partner*— 
rifice  much  of  the  convenience  of  having  a  firm  name,  as  it 
may  be  used  as  a  firm  name,23  though  this  would  seem  to  sac- 
Maugham  v.  Sharpe,  17  C.  B.  (N.  S.)  443,  Burdick's  Cases,  160; 
Wright  v.  Hooker,  10  N.  Y.  51;  Edgerton  v.  Preston,  15  111.  App.  23; 
Holbrook  v.  St.  Paul  F.  &  M.  Ins.  Co.,  25  Minn.  229;  Pollock,  Partn. 
art.  11. 

20  Edgerton  v.  Preston,  15  111.  App.  23. 

2iLauferty  v.  Wheeler,  11  Daly  (N.  Y.)  194;  Gay  v.  Seibold,  97 
N.  Y.  472;  Kahn  v.  Thomson,  113  Ga.  957,  39  S.  E.  322. 

22  Shain  v.  Du  Jardin  (Cal.)  38  Pac.  529,  Burdick's  Cases,  138; 
Pollock,  Partn.  art.  11.  A  partnership  may  be  called  the  "Union 
Towing  Co.,"  and  the  partners  may  sue  in  their  individual  names 
upon  a  contract  made  with  them  in  that  name.  Crawford  v.  Collins, 
45  Barb.   (N.  Y.)   269,  30  How.  Prac.    (N.  Y.)   398. 

"Partnerships  are  generally  carried  on  in  the  names  of  the  part- 
ners, and,  when  only  one  name  is  used,  the  words  'and  company' 
are  usually  annexed  to  indicate  that  other  persons  are  interested 
in  the  business.  Partnerships  are  sometimes  carried  on  under  the 
names  of  persons  who  are  dead,  but  who,  in  their  lifetime,  had  es- 
tablished an  extensive  business,  and  a  high  reputation  for  integrity 
and  fidelity  in  trade.  Any  name  assumed  and  used  by  persons  doing 
business  together  in  the  relation  of  partners  becomes  a  legitimate 
name  and  style  of  the  firm,  although  it  may  not  contain  the  indi- 
vidual name  of  any  of  the  partners."  Oppenheimer  v.  Clemmons, 
18  Fed.  887. 

23  Bank  of  Rochester  v.  Monteath,  1  Den.  (N.  Y.)  402;  Wright  v. 
Hooker,  10  N.  Y.  51;  Palmer  v.  Stephens,  1  Den.  (N.  Y.)  471;  Kirk 
v.  Blurton,  9  Mees  &  W.  284;  Manufacturers'  &  Mechanics'  Bank  v. 
Winship,  5  Pick.  (Mass.)  11;  Winship  v.  Bank  of  U.  S.,  5  Pet.  (U.  S.) 
529.  Where  the  members  of  a  copartnership  agree  that  the  business 
of  the  concern  shall  be  carried  on  by  and  in  the  name  of  the  copart- 
ners, such  name,  for  the  purpose  of  the  business  of  the  firm,  is  its 
copartnership  name,  and  by  it  the  several  members  are  bound.  So, 
where  the  copartners  agree  that  the  business  shall  be  carried  on  by 
and  in  the  name  of  an  individual  not  himself  interested,  his  name 
is  the  copartnership  name,  and  is  binding  upon  the  firm  when  used 
in  its  business.     Bank  of  Rochester  v.  Monteath,  1  Den.  (N.  Y.)  402. 


105  FIRM  NAME. 

would  be  necessary  to  show  thai  a  contract  in  such  name  was 
made  on  behalf  of  the  firm,  and  on  its  credit,  in  order  to  bind 
the  firm;  it  being  prima  facie  the  individual  contract  of  the 
partner  in  whose  name  it  was  made.24 

Statutory  Regulation. 

Statutory  provisions  regulating  the  use  of  firm  names  exist 
in  manv  states.23  In  some  states,  it  is  forbidden  by  statutes 
to  use,  in  the  firm  name,  the  name  of  a  former  partner  with- 
out his  consent,26  or,  more  generally^  the  name  of  any  one 
no1  a  partner,  or  the  suffix  "&  Co.,"  unless  such  suffix  stands 
for  an  actual  partner,  who  is  not  otherwise  named.27  So, 
also,  the  use  of  a  name  appropriate  to  a  corporation  is  some- 

-•  Macklin's  Ex'r  v.  Crutcher,  6  Busk  (Ky.)  401;  Oliphant  v. 
Mathews,  16  Barb.  (N.  Y.)  608;  Mechanics'  &  Farmers'  Bank  v. 
Dakin,  24  Wend.  (N.  Y.)  411.  Where  the  firm  name  is  the  indi- 
vidual name  of  one  partner,  a  note  execute  by  and  in  the  name  of 
such  partner  is  prima  facie  his  individual  obligation.  National 
Bank  v.  Ingraham,  58  Barb.  (N.  Y.)  290.  Bills  drawn  upon  and 
accepted  by  the  partner  whose  name  is  so  used  will  be  recoverable 
against  the  firm,  in  the  absence  of  proof  that  such  partner  also  car- 
ried on  business  on  his  private  account.  Bank  of  Rochester  v.  Mon- 
teath.  1  Den.  (N.  Y.)  402,  followed  by  Wright  v.  Hooker,  10  N.  Y. 
51.    To  same  effect,  Palmer  v.  Stephens,  1  Den.  (N.  Y.)  471. 

Where  no  firm  name  is  adopted,  but  the  partners  intend  that  all 
the  business  of  the  firm  shall  be  done  in  the  name  of  one  partner, 
transactions  by  such  partner  on  joint  account,  and  within  the  au- 
thority confided  to  him,  are  binding  upon  all,  even  if  his  agency  is 
not  disclosed  to  the  persons  who  whom  he  deals.    Getchell  v.  Foster, 

106  Mass.  42.  v 
-*•>  See  the  codes  and  statutes  of  the  various  states.     See,  also,  Yale  A 

v.  Taylor  Mfg.  Co.,  63  Miss.  598;  Loeb  v.  Morton,  63  Miss.  280;  Quin .) 
v.  Alyles,  59  Miss.  375.  — — 

sc-Arnstaedt  v.  Blumenfeld,  13  Daly  (N.  Y.)  354;  Rogers  v.  Tain- 
ror,  97  Mass.  291;  Sohier  v.  Johnson,  111  Mass.  238.  A  former  part- 
ner is  entitled  to  an  injunction  to  prevent  the  use  of  his  name,  and 
to  compensation  for  any  loss  suffered,  but  not  to  an  account  of  the 
profits  made  from  the  unauthorized  use  of  his  name.  Lawrence  v. 
Hull,  169  Mass.  250,  47  N.  E.  1001. 

--  Swords  v.  Owen,  43  How.  Prac.  (N.  Y.)  176;  Kennedy  v.  Budd, 
.5  App.  Div.  (N.  Y.)  140;  Wolfe  v.  Joubert,  45  La.  Ann.  1100,  13  So. 


WHAT  MAY  BE  ADOPTED.  lO'J 

times  prohibited.28  Firms  doing  business  under  fictitious 
names,  or  names  not  showing  the  names  of  the  partners,  are 
sometimes  required  by  statute  to  make  and  file  with  a  desig- 
nated officer  a  certificate  stating  the  names  and  residences  of 
all  the  partners.20  The  object  of  these  statutory  regulations 
is  the  prevention  of  fraud  upon  persons  dealing  with  the 
firm,  and  such  statutes  should  not  be  extended  further  than 
necessary  for  this  purpose.30 

Exclusive  Right  of  Firm  to  Trade  Name. 

Where  a  particular  name  under  which  a  business  is  carried 
on  by  any  person,  firm,  or  company  has  become  associated 
with  and  appropriated  to  that  business,  no  other  person  may 
carry  on  a  like  business  under  the  same  name,  or  a  name 
only  colorably  different  therefrom,  in  a  manner  calculated  to 
deceive  customers  by  leading  them  to  believe  that  they  are 
dealing  with  such  person,  firm,  or  company.31 

806;  Zimmerman  v.  Erhard,  83  N.  Y.  74,  38  Am.  Rep.  396;  Lunt  v. 
Lunt,  8  Abb.  N.  C  .(N.  Y.)  76;  Sparrow  v.  Kohn,  109  Pa.  359,  2  Atl. 
498. 

28  See  Hazelton  Boiler  Co.  v.  Hazelton  Tripod  Boiler  Co.,  142  111. 
494,  30  N.  E.  339;  Pollock,  Partn.  art.  10. 

29  Pendleton  v.  Cline,  85  Cal.  142,  24  Pac.  659;  Swope  v.  Burnbam, 
6  Okl.  736,  52  Pac.  924.  The  firm  name,  "Hirsh  Bros.,"  is  not  a 
fictitious  name,  and  sufficiently  designates  tbe  persons  constituting 
the  partnership,  and  hence  is  not  within  the  statute.  Cochran  v. 
Hirsch  Bros.,  4  Ohio  N.  P.  34. 

30  Wood  v.  Erie  Ry.  Co.,  72  N.  Y.  196;  Thompson  v.  Gray,  11  Daly 
(N.  Y.)  183;  Gay  v.  Siebold,  97  N.  Y.  472;  Kennedy  v.  Budd,  5  App. 
Div.  (N.  Y.)  140;  Sparrow  v.  Kohn,  109  Pa.  359,  2  Atl.  498.  But 
compare  Lane  v.  Arnold,  13  Abb.  N.  C.  (N.  Y.)  73.  The  intent  of 
the  statute  is  to  prevent  a  firm  from  inducing  a  false  credit  on  the 
strength  of  an  unauthorized  name,  but  not  to  prevent  the  giving  of 
credit,  nor  to  furnish  a  debtor  of  an  offending  firm  with  a  defense. 
Wolfe  v.  Joubert,  45  La.  Ann.  1100,  13  So.  806;  Kennedy  v.  Budd,  5 
App.  Div.   (N.  Y.)    140. 

8i  Pollock,  Partn.  art.  11.  The  principle  stated  in  the  text  is  not 
peculiar  to  the  law  of  partnership.  It  belongs  more  properly  to  that 
branch  of  the  general  law  of  ownership  which  deals  with  trade- 
marks and  other  analogous  rights.     Id. 


HO  FIRM  NAME. 

Goodwill. 

While  the  good  will  of  a  partnership  embraces  more  than 
the  right  to  use  the  firm  name,  it  differs  little  in  other  res- 
pects from  the  good  will  of  individuals,  which  is  beyond  the 
scope  of  the  present  work.32  On  dissolution  the  right  of  a 
retiring  partner  to  inaugurate  a  competing  business  depends 
on  the  contract  of  the  parties,  contained  in  the  articles  of 
partnership  or  subsequently  made  to  the  same  extent  as  if 
the  partnership  relation  had  never  existed. 

■'•'-  Partnership  good-will  and  the  means  of  making  it  productive 
after  the  death  of  a  partner  is  discussed  in  a  monographic  note  to 
Slater  v.  Slater,  96  Am.  St.  Rep.  605,  175  N.  Y.  143,  60  N.  E.  934. 

The  points  relating  to  the  good-will  of  a  partnership  business  are 
summarized  by  Lindley  on  Partnership  (6th  Ed.  p.  445)  as  follows: 
"The  salable  value  of  the  good-will  of  a  partnership  business,  what- 
ever that  value  may  be,  must  be  considered  as  belonging  to  the 
firm,  unless  there  is  some  agreement  to  the  contrary,  and  it  follows 
from  this:  (1)  That,  if  a  firm  is  dissolved  and  there  is  no  agreement 
to  the  contrary,  the  good-will  must  be  sold  for  the  benefit  of  all  the 
partners,  if  any  of  them  insist  on  such  sale.  Pawsey  v.  Armstrong, 
IS  Ch.  Div.  698,  Burdick's  Cases,  90;  Bradbury  v.  Dickens,  27  Beav. 
53.  (2)  That,  so  far  as  possible,  having  regard  to  the  right  of  every 
partner  to  carry  on  business  himself,  the  court  will,  on  a  dissolution, 
interfere  to  protect  and  preserve  the  good-will  until  it  can  be  sold. 
See  Turner  v.  Major,  3  Giff,  442.  (3)  That,  if  a  partner  has  himself 
obtained  the  benefit  of  the  good-will,  he  can  be  compelled  to  account 
for  its  value,  i.  e.,  for  what  it  would  have  sold  for,  he  being  himself 
at  liberty  to  compete  in  business  with  the  purchaser.  Smith  v. 
Everett,  27  Beav.  446;  Mellersh  v.  Keen,  27  Beav.  236,  28  Beav.  453." 

In  case  of  the  death  of  a  partner,  there  is  no  survival  of  the  good- 
will, but  if  the  surviving  partner  carries  on  the  business,  he  must 
account  to  the  representatives  of  the  deceased  partner  for  the  value 
of  the  good-will.  Dougherty  v.  Van  Nostrand,  1  Hoff.  Ch.  (N.  Y.)  68; 
Rammelsberg  v.  Mitchell,  29  Ohio  St.  22;  Holden  v.  McMakin,  1 
Pars.  Sel.  Cas.  (Pa.)  270.  See  Woerner's  Admn.  (3d  Ed.)  §  127. 
YvHien  a  partner  retires  from  the  business,  assenting  to  the  retention 
or  the  place  of  business  by  the  other  partners,  and  the  future  con- 
duct of  the  business  by  them  under  the  old  name,  the  good-will  re- 
mains with  them  as  a  matter  of  course.    Menendez  v.  Holt,  128  U.  S. 


USE  OF  FIRM  NAME.  HI 


Use  of  Firm  Name  After  Dissolution. 

6oa.     The  right  to  use  the  firm  name  is  a  part  of  the  assets. 

It  does  not  inure  to  a  continuing  or  surviving  partner, 

but  is  to  be  accounted  for  as  an  asset. 
6ob.     It  dies  with  the  last  surviving  partner  and  does  not 

pass  to  his  personal  representative. 
6oc.     A  continuing  partner  having  purchased  the  good  will 

is  entitled  to  the  exclusive  use  of  the  firm  name. 
6od.     In  the  absence  of  any  agreement  as  to  good  will  either 

partner  may  use  the  firm  name  in  any  manner  which 

does  not  involve  the  other  in  liability. 

It  was  at  one  time  held  that  the  good  will  in  the  firm  name 
descended  to  the  surviving  partner  on  principles  of  joint  ten- 
ancy,33 but  it  is  now  well  settled  that  it  is  partnership  prop- 
erty in  which  the  estate  of  a  deceased  partner  is  entitled  to 
share,  and  for  which  a  retiring  partner  is  entitled  to  com- 
pensation.34 

514,  522.  As  a  general  rule,  and  in  the  absence  of  express  contract, 
there  is  not,  in  a  professional  partnership,  as  between  solicitors,  any 
partnership  asset  which  is  capable  of  being  sold  or  valued  as  the 
good-will  of  the  partnership  business.  Arundell  v.  Bell,  52  L.  J.  Ch. 
537,  49  Law  Times  (N.  S.)  345,  31  Wkly.  Rep.  477,  19  Eng.  Rul.  Cas. 
€57.  This  accords  with  the  view  expressed  by  Judge  Story:  "It 
seems  that  good-will  can  constitute  a  part  of  the  partnership  effects 
or  interests  only  in  cases  of  mere  commercial  business  or  trade,  and 
not  in  cases  of  professional  business,  which  is  almost  necessarily 
connected  with  personal  skill  and  confidence  in  the  particular  part- 
ner." Story,  Partn.  (7th  Ed.)  §  99.  And  in  McCall  v.  Moschcowitz, 
10  N.  Y.  Civ.  Proc.  R.  107,  the  court  said  that  the  good-will  of  a 
millinery  business,  which  depends  largely  upon  the  skill  of  one  of 
the  partners,  is  no  more  the  property  of  the  copartnership  or  the 
subject  of  sale  than  would  be  the  good-will  of  an  attorney's  busi- 
ness or  that  of  an  artist. 

33  Hammond  v.  Douglass,  5  Ves.  539. 

a*  Piatt  v.  Piatt,  42  Conn.  330;  Dougherty  v.  Van  Nostrand.  1  Hoff. 
Ch.  (N.  Y.)  68;  Rammelsberg  v.  Mitchell,  29  Ohio  St.  22;   Slater  v. 


1  i  2  USE  OF  FIRM  NAME. 

It  is,  however,  so  connected  with  the  partnership  that  it 
dies  with  the  last  surviving1  partner,  and  does  not  pass  to  his 
personal  representative.85 

On  the  retiremeril  of  a  partner  without  any  agreement  as 
to  good  will,  either  lias  the  right  to  use  the  firm  name  in  any 
manner  not  involving  the  other  in  liability.30  But  the  good 
will  in  the  tinn  name  being  as  has  been  seen  an  asset,  if  the 
continuing  partner  purchase  it  as  such  he  will  be  protected  in. 
its  exclusive  use.37 

Subject  to  the  limitation  that  he  shall  not  use  it  in  such- 
manner  as  to  lead  the  public  to  believe  that  the  retiring  part- 
ner is  still  connected  with  the  firm,38  a  surviving  partner  is,, 
of  course,  entitled  to  the  firm  name  while  settling  the  affairs 
of  the  late  partnership.39  And  if  he  continues  the  business 
he  stands  in  the  same  position  as  a  continuing  partner.40 

Slater,  175  N.  Y.  143,  60  N.  E.  934,  96  Am.  St.  Rep.  605,  61  L.  R.  A. 
796.  See,  however,  Kirkman  v.  Kirkman,  20  Misc.  211,  45  N.  Y. 
Supp.  377,  which  seems  to  draw  a  distinction  between  good-will  and 
right  to  use  firm  name. 

35  Fisk  v.  Fisk,  77  App.  Div.  83,  79  N.  Y.  Supp.  37. 

36Burchell  v.  Wilde,  82  Law  T.  (N.  S.)  576;  Cottrell  v.  Babcock 
Printing  Press  Mfg.  Co.,  54  Conn.  122;  Banks  v.  Gibson,  34  Beav. 
566. 

37  Rogers  v.  Taintor,  97  Mass.  291;  Adams  v.  Adams,  7  Abb.  N.  C. 
(N.  Y.)  292.  And  see  Steinfeld  v.  National  Shirt  Waist  Co.,  99  App. 
Div.  286,  90  N.  Y.  Supp.  964.  "Upon  the  expiration  of  a  partnership 
between  two  persons,  the  partner  who  has  purchased  the  good-will 
and  assets  of  the  business  under  the  terms  of  the  articles  of  partner- 
ship can  restrain  his  former  partner  from  soliciting  the  customers 
of  the  old  firm,  although  the  articles  contain  a  proviso  that  nothing 
therein  contained  shall  prevent  either  partner  from  starting  a  sim- 
ilar business  in  the  neighborhood  after  the  expiration  of  the  part- 
nership. Such  a  proviso  only  expresses  what  the  law  would  have 
implied."  Gillingham  v.  Beddow,  69  Law  J.  Ch.  527,  2  Ch.  Div. 
[1900]  242,  82  Law  J.   (N.  S.)  791,  64  J.  P.  617. 

38  Hallett  v.  Cumston,  110  Mass.  29;  McGowan  Bros.  Pump  &  Mach~ 
Co.  v.  McGowan,  22  Ohio  St.  370. 

so  Commercial  Nat.  Bank  v.  Proctor,  98  111.  558. 
40  Bank  v.  Gibson,  34  Beav.  566. 


CHAPTER  VI. 

CAPITAL  OF  FIRM. 


61.  Definition  and  Nature. 

62.  What  may  be  Contributed. 
63-65.     Rights  of  Partners. 


Definition  and  ^Nature. 

6i.  The  capital  of  a  firm  is  the  aggregate  of  the  amounts  to 
be  contributed  by  the  partners  as  the  basis  of  beginning 
or  continuing  the  partnership  business.1 

By  the  capital  of  a  partnership  is  meant  the  aggregate  of 
the  sums  contributed  by  its  members  for  the  purpose  of  com- 
mencing and  carrying  on  the  partnership  business,  and  in- 
tended to  be  risked  by  them  in  that  business.2  Partnership 
capital,  of  course,  belongs  to  the  firm,  or  all  the  partners 
jointly  and  is  partnership  property,3  but  the  two  terms,  "part- 
nership capital,"  and  "partnership  property,"  are  not  syn- 

i  Bates,  Partn.  §  251. 

2Lindl.  Partn.  p.  320;  Topping  v.  Paddock,  92  111.  92.  A  premium 
paid  as  a  consideration  for  admission  to  a  business  as  a  partner  is 
not  a  contribution  to  capital.    Evans  v.  Hanson,  42  111.  234. 

sTaft  v.  Schwamb,  80  111.  289,  Burdick's  Cases,  577;  Nutting  v. 
Ashcroft,  101  Mass.  300;  Clements  v.  Jessup,  36  N.  J.  Eq.  569;  Malley 
v.  Atlantic  F.  &  M.  Ins.  Co.,  51  Conn.  22;  Smith  v.  Small,  54  Barb. 
(N.  Y.)  223;  Whitcomb  v.  Converse,  119  Mass.  38,  Burdick's  Cases, 
575,  Mechem's  Cases,  492;  Hiscock  v.  Phelps,  49  N.  Y.  97;  Clark's 
Appeal,  72  Pa.  142.  As  to  the  nature  of  a  partner's  interest  in  firm 
property,  whether  as  joint  tenant,  tenant  in  common,  or  otherwise, 
see  infra,  c.  7. 

8 


114  CAPITAL  OF  FIRM. 

onymous,  and  ii  is  important  to  distinguish  between  them. 
Partnership  property  includes  everything  belonging  to  the 

tii-iii,  and  its  amount  may  vary  from  day  to  day,  while  the 
partnership  capital  is  a  sum  fixed  by  the  agreement  of  the 
partners,  and  does  uo1  vary,  though  of  course  it  may  he  im- 
paired by  losses.  The  capital  of  each  partner  is  not  necess- 
arily the  same  as  such  partner's  share  of  the  firm  assets,  for 
this  share  may  be  either  greater  or  less  than  his  capital,  ac- 
cording  to  whether  the  business  has  resulted  in  profits  or 
losses  while  the  capital  as  has  been  said,  always  remains 
fixed.4  "Moreover,  the  capital  of  each  partner  is  not  neces- 
sarily the  amount  due  to  him  from  the  firm,  for  not  only  may 
he  owe  the  firm  money,  so  that  less  than  his  capital  is  due 
him,  but  the  firm  may  owe  him  money  in  addition  to  his  cap- 
ital, e.  g.,  for  money  advanced  by  him  to  the  firm  by  the  way 
of  loan,  and  not  intended  to  be  wholly  risked  in  the  busi- 
ness.  ° 

What  May  be  Contributed. 

62.  Partnership  capital  may  consist  of  anything^  of  value 
which  the,  partners  agree  TcTcontribute  and  receive  as" 
capital. 

The  contributions  of  the  different  partners  to  the  capital 
of  the  firm  are  governed  wholly  by  the  agreement  between 
them.  The  contributions  may  be  cither  in  money  or  real  or 
personal  property,  or  some  partners  may  contribute  money, 

*  Undrawn  and  accumulated  profits  do  not  constitute  capital. 
Dean  v.  Dean,  54  Wis.  23,  11  N.  W.  239.  But  see  Raymond  v.  Put- 
nam, 44  N.  H.  160,  wherein  undrawn  profits  were  allowed  to  be 
added  to  the  original  capital.  The  articles  of  partnership  in  this 
case  expressly  provided  that  any  partner  might  either  increase  or 
diminish  his  capital  at  pleasure. 

s  Lindl.  Partn.  p.  320. 


RIGHTS  OF  PARTNERS.  115 

and  some  property.  Instead  of  property,  the  mere  use  of 
property  owned  by  one  or  more  partnrs  individually,  may  be 
.contributed  as  capital.6  The  contributions  of  the  different 
partners  may  be  equal  or  unequal,  or  some  may  contribute 
nothing  whatever  to  the  capital.7  It  is  sometimes  said  that  a 
partner's  capital  may  consist  of  his  time,  labor,  and  skill  in 
the  partnership  business.  This  may,  indeed,  form  the  con- 
sideration for  the  contract  of  partnership  between  him  and 
the  other  partners,  but  it  cannot  properly  be  called  capital, 
and  it  gives  him  no  right  in  the  ultimate  distribution  of  the 
capital  between  the  partners.8  In  determining  the  amount 
of  a  partner's  contribution,  any  incumbrances  or  liens  thereon 
must  be  taken  into  account.9 

Rights  of  Paetnees. 

63.  The  capital  of  a  partner  cannot  be  either  increased  or 
diminished  during  trie  continuance  of  the  partnership, 
without  the  consent  of  all  the  partners. 

64.  Upon  dissolution,  the  capital  is  to  be  returned  to  the 
partners  contributing  it,  in  the  proportions  in  which  it 
was  contributed. 

65.  Where  there  is  nothing  to  show  the  amount,  the  various 
contributions  will  be  presumed  to  have  been  equal. 

6  Murphy  v.  Warren,  55  Neb.  215,  75  N.  W.  573.  "There  can  be  no 
doubt,  in  view  of  the  numerous  decisions  to  that  effect,  that  the  cap- 
ital of  a  firm  'may  consist  of  the  mere  use  of  the  property  owned  by 
one  member  of  the  firm.'  "  Whiting  v.  Leakin,  66  Md.  255,  7  Atl. 
688,  citing  Citizens'  Fire  Ins.  etc.  Co.  v.  Doll,  35  Md.  106;  Ward  v. 
Thompson,  22  How.  (U.  S.)  330. 

1  The  mere  agreement  to  be  a  partner,  and  as  such  subject  to  the 
claims  of  third  persons,  is  a  sufficient  consideration  for  a  contract  of 
partnership.     See  supra,  §  50. 

s  See  infra,  §§  63-65. 

oDunnell  v.  Henderson,  23  N.  J.  Eq.  174;  Sexton  v.  Lamb,  27  Kan. 
624;  Nichol  v.  Stewart,  36  Ark.  612. 


lit;  CAPITAL  OF  FIRM. 

After  the  capital  and  contributions  of  the  different  partners 
have  been  fixed  by  agreement,  they  cannot  be  changed  without 
the  consent  of  all  the  partners.  A  partner  cannot  voluntarily 
increase  his  capital,  nor  can  he  be  compelled  to  furnish  more 
capita]  than  he  has  agreed  to  bring  in  and  risk.  But  he  must 
bring  in  the  amount  he  has  agreed  to  do,  and  must  leave  it  in 
the  business  until  the  firm  is  dissolved.10 

Return  of  Contributions  on  Dissolution. 

Upon  the  dissolution  of  the  partnership,  and  the  winding 
up  of  its  affairs,  the  capital  must  be  returned  to  the  partners 
who  contributed  it,  before  there  can  be  any  distribution  of 
profit.11  Each  partner's  contribution  is  regarded  as  a  firm 
debt  to  such  partner,  which  must  be  repaid  before  there  are 
any  profits  to  be  divided.12  The  capital  is  distributed  in  the 
same  proportions  in  which  it  was  furnished.  A  partner  who 
furnished  no  capital,  but  merely  contributed  his  time  and 
services,  is  not  entitled  to  any  part  of  the  capital.13  He  must 
look  to  his  share  of  the  profits  for  compensation.     Where  the 

ioLindl.  Partn.  p.  321;  Fulmer's  Appeal,  90  Pa.  143;  Crawshay  v. 
Collins,  15  Ves.  218;  Cocke  v.  Evans'  Heirs,  9  Yerg.  (Tenn.)  287. 

ii  Whitcomb  v.  Converse,  119  Mass.  38,  Burdick's  Cases,  575, 
Mechem's  Cases,  492;  Shea  v.  Donahue,  15  Lea  (Tenn.)  160;  Taylor 
v.  Coffing,  18  111.  422;  Marquand  v.  New  York  Mfg.  Co.,  17  Johns. 
(N.  Y.)   525. 

12  Whitcomb  v.  Converse,  119  Mass.  38,  Burdick's  Cases,  575, 
Mechem's  Cases,  492.  Of  course  the  debt  of  the  firm  to  a  partner 
for  capital  is  subordinate  to  the  claims  of  third  persons.  See  infra, 
§  127. 

"Washington  v.  Washington  (Tex.  Civ.  App.),  31  S.  W.  88;  Shea 
v.  Donahue,  15  Lea  (Tenn.)  160;  Conroy  v.  Campbell,  13  Jones  &  S. 
(N.  Y.)  326;  Hasbrouck  v.  Childs,  3  Bosw.  (N.  Y.)  105.  A  simple 
method  of  making  distribution  in  accordance  with  the  rule  stated 
in  the  text  is  to  ascertain  the  amount  contributed  by  each  partner; 
and  the  amount  contributed  by  one  partner  in  excess  of  another 
should  first  be  given  him  out  of  the  assets,  and  then  the  balance  is 
to  be  divided  among  all  the  partners  in  proportion  to  their  several 
interests.  The  excess  of  one  partner's  advances  over  those  of  an- 
other  constitute   a   preferred    claim    upon    the    partnership    assets. 


RIGHTS  OF  PARTNERS.  117 

firm  assets  are  not  sufficient  to  return  the  capital  in  full  to 
those  who  contributed,  the  deficiency  must  be  borne  by  all 
the  partners  in  the  proportion  in  which  they  would  be  liable 
for  any  other  loss,  and,  in  the  absence  of  anything  to  show  a 
contrary  agreement,  it  will  be  presumed  that  the  loss  is  to  be 
shared  equally,  even  though  the  capital  may  have  been  con- 
tributed unequally.14  The  loss  does  not  fall  solely  upon  the 
partners  contributing  the  capital.  A  partner  who  contrib- 
uted only  his  services  is  liable  for  his  share  of  a  loss  of  capital, 
though  he  also  has  lost  his  labor.15 

Presumption  of  Equality. 

Where  there  is  nothing  to  show  what  proportion  of  the  capi- 
tal was  contributed  by  each  partner,  it  will  be  presumed, 
prima  facie,  that  all  contributed  equally,  and  a  distribution 
and  settlement  will  be  made  on  that  basis.16 

Chamberlain  v.  Sawyers,  17  Ky.  L.  R.  716,  32  S.  W.  475;  Matthews 
v.  Adams  (Md.),  33  Atl.  645;  Nims  v.  Nims,  23  Fla.  69,  1  So.  527; 
Fish  v.  Thompson,  68  Vt.  273,  35  Atl.  174,  Burdick's  Cases,  3. 

i*  Whitcomb  v.  Converse,  119  Mass.  38,  Burdick's  Cases,  575, 
Mechem's  Cases,  492;  Jones  v.  Butler,  87  N.  Y.  613;  Taft  v. 
Schwamb,  80  111.  289,  Burdick's  Cases,  577;  Richards  v.  Grinnell, 
63  Iowa,  44,  18  N.  W.  668;  Raymond  v.  Putnam,  44  N.  H.  160;  Pea- 
cock v.  Peacock,  16  Ves.  49;  Copland  v.  Toulmin,  7  Clark  &  F.  349; 
Robinson  v.  Anderson,  7  De  Gex,  M.  &  G.  239;  Taylor  v.  Coffing,  18 
111.  422.  As  to  the  amount  of  a  partner's  share  of  profits  and  losses, 
see  infra,  §  75. 

In  Hasbrouck  v.  Childs,  3  Bosw.  (N.  Y.)  105,  each  partner  con- 
tributed the  same  amount  of  capital,  but  it  was  agreed  that  H., 
who  was  to  devote  his  whole  time  to  the  business,  should  receive 
three-ioiirths  of  the  profits.  The  firm  met  with  a  loss.  It  was  held 
that  the  loss  should  be  equally  borne  by  all  the  partners,  and  that 
each  was  entitled  to  an  equal  share  of  the  remaining  assets. 

'•"Whitcomb  v.  Converse,  119  Mass.  38,  Burdick's  Cases,  575, 
Mechem's  Cases,  492;  Woelfel  v.  Thompson,  173  Mass.  301,  53  N.  E. 
819. 

io  Jackson  v.  Crapp,  32  Ind.  429;  Peacock  v.  Peacock,  16  Ves.  49; 
Copland  v.  Toulmin,  7  Clark  &  F.  349;  Robinson  v.  Anderson,  7  De 
Gex,  M.  &  G.  239. 


CHAPTER  VII. 

PARTNERSHIP  PROPERTY. 

66-68.  What  Constitutes. 

69-71.  How  Title  is  Held. 

72-73.  Nature  of  Partner's  Interest. 

74.  Sale  or  Partition. 

75-76.  Proportionate  Share  of  Each  Partner. 

77-78.  Attachment  or  Execution  for  Individual  Debt  of  Partner. 

79-80.  Conversion  of  Firm  Realty  into  Personalty. 

81.  Changing  Joint  into  Separate  Property,  and  Vice  Versa. 

What  Constitutes. 

66.  Partnership  property  includes  everything  of  value 
which  belongs  to  the  partners  as  a  firm,  as  distinguished 
from  that  which  belongs  to  the  partners  as  individuals. 

67.  Whether  or  not  any  particular  property  is  partnership 
property  depends  upon  the  intention  of  the  partners,  as 
evidenced  by  their  express  or  implied  agreement. 

68.  Prima  facie^  all  property  and  valuable  interests  orig- 
inally brought  into  the  capital  stock,  and  the  product 
thereof,  constitutes  partnership  properly,  except — 

Exception. — Where  co-owners  of  land  are  partners 
merely  as  to  the  profits  of  the  land,  other  land  pur- 
chased out  of  such  profits  belongs  to  them  as  co- 
owners,  and  not  as  partners. 

The  expression  "partnership  property"  denotes  everything 
to  which  all  the  partners  are  entitled  as  partners.1  Whether 
or  not  any  particular  property,  real  or  personal,  is  or  is  not 

1  Persons  may  be  entitled  to  property  jointly  or  in  common,  and 
may  also  be  partners,  and  yet  that  property  may  not  be  partner- 
ship property.     Morris  v.  Barrett,  3  Younge  &  J.  384. 


WHAT  CONSTITUTES.  119 

partnership  property,  depends  upon  the  agreement  between 
the  partners,2  and,  in  the  absence  of  any  express  agreement, 
upon  the  agreement  which  may  be  implied  from  the  circum- 
stances under  which  it  was  acquired  and  subsequently  used.3 

2  Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078,  Burdick's 
Cases,  165,  Mechem's  Cases,  155;  Lindsay  v.  Race,  103  Mich.  28,  61 
N.  W.  271;  Fairchild  v.  Fairchild,  64  N.  Y.  477;  Lefevre's  Appeal, 
69  Pa.  125;  Brooke  v.  Washington,  8  Grat.  (Va.)  248,  56  Am.  Dec. 
146. 

3  Whether  or  not  land  is  partnership  property  depends  upon  the 
intention  of  the  partners.  Wilson  v.  Black,  164  Pa.  555,  30  Atl.  488; 
Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078,  Burdick's  Cases, 
165,  Mechem's  Cases,  155,  wherein  the  court  said:  "That  intention 
may  be  expressed  in  the  deed  conveying  the  land,  or  in  the  articles 
of  partnership,  but  when  it  is  not  so  expressed,  the  circumstances, 
usually  relied  upon  to  determine  the  question,  are  the  ownership 
of  the  funds  paid  for  the  land,  the  uses  to  which  it  is  put,  and  the 
manner  in  which  it  is  entered  in  the  accounts  upon  the  books  of 
the  firm.  Where  real  estate  is  bought  with  partnership  funds  for 
partnership  purposes,  and  is  applied  to  partnership  uses,  or  entered 
and  carried  in  the  accounts  of  the  firm  as  a  partnership  asset,  it  is 
deemed  to  be  firm  property;  and,  in  such  case,  it  makes  no  differ- 
ence, in  a  court  of  equity,  whether  the  title  is  vested  in  all  the  part- 
ners as  tenants  in  common,  or  in  one  of  them,  or  in  a  stranger." 
See,  also,  Lindsay  v.  Race,  103  Mich.  28,  61  N.  W.  271;  Page  v. 
Thomas,  43  Ohio  St.  38,  1  N.  E.  79;  Collner  v.  Greig,  137  Pa.  606,  20 
Atl.   938. 

"When  the  land  is  conveyed  to  several  partners,  it  is  not  indis- 
pensable that  it  should  be  actually  used  for  partnership  purposes, 
nor  that  a  positive  agreement  should  be  proved,  making  it  partner- 
ship property.  If  it  has  been  paid  for  with  partnership  effects,  it 
is  then  a  question  of  intention,  whether  the  conveyance  is  to  have 
its  legal  effect,  and  the  parties  are  to  be  treated  as  tenants  in  com- 
mon, or  whether  the  land  is  to  be  treated  as  partnership  property. 
The  manner  in  which  the  accounts  are  kept,  whether  the  purchase 
money  was  severally  charged  to  the  members  of  the  firm,  or  whether 
the  accounts  treat  it  the  same  as  other  firm  property,  as  to  pur- 
chase money,  income,  expenses,  etc.,  are  controlling  circumstances 
in  determining  such  intention,  and  from  these  circumstances  an 
agreement  may  be  inferred."  Fairchild  v.  Fairchild,  64  N.  Y.  477. 
The  same  evidence  which  will  establish  its  character  as  partner- 
ship property  for  the  purpose  of  paying  the  debts  and  adjusting  the 


12Q  PARTNERSHIP  PROPERTY. 

All  property  originally  brought  into  the  partnership  stock,  or 
subsequently  acquired,  whether  by  purchase  or  otherwise,  on 
account  of  the  firm,  or  for  the  purposes  and  in  the  course  of 
the  partnership  business,  is  partnership  property.4  The  capi- 
tal is  necessarily  partnership  property,  for  by  its  very  nature 
ii  is  property  agreed  to  be  contributed  by  the  partner  to  the 
firm  for  partnership  purposes.5     Property  bought  with  money 

equities  will  determine  it  for  the  purpose  of  final  division.  Fair- 
child  v.  Fairchild,  64  N.  Y.  471. 

-i  Smith  v.  Small,  54  Barh.  (N.  Y.)  223;  Wheatley's  Heirs  v.  Cal- 
houn, 12  Leigh  (Va.)  264,  37  Am.  Dec.  654.  "Land  is  not  ordinarily 
a  subject  of  partnership  operation,  and  therefore  stronger  evidence 
is  required  to  show  an  intent  to  convert  real  estate  into  partner- 
ship stock.  But  it  is  capable  of  being  so  converted;  and  an  inten- 
tion to  make  such  conversion  being  shown  by  sufficient  evidence,  it 
becomes  as  completely  a  part  of  the  social  effects  as  if  it  were  per- 
sonal estate.  In  the  case  of  Wheatley's  Heirs  v.  Calhoun,  12  Leigh 
(Va.)  264,  37  Am.  Dec.  654,  this  court  said  that  'whatever  doubts 
may  have  heretofore  existed  as  to  the  light  in  which  real  property 
is  to  be  considered,  when  bought  and  used  by  a  commercial  part- 
nership for  the  purposes  of  the  concern,  it  is  now  well  settled  that 
it  is  to  be  looked  upon  as  forming  a  part  of  the  partnership  funds. 
Such  is  at  present  the  received  doctrine  in  England,  and  so  this 
court  has  decided.'  In  that  case,  Wheatley  and  Calhoun  had  pur- 
chased a  mill  and  tract  of  land  jointly,  and  for  some  time  conducted 
a  partnership  milling  business.  The  question  was  whether  there 
was  sufficient  evidence  of  an  intention  to  convert  the  mill  into  part- 
nership stock,  or  whether  they  merely  intended  to  carry  on  the  mill- 
ing business  in  partnership.  Tucker,  P.,  in  delivering  the  opinion 
of  the  court,  said:  "There  may,  indeed,  be  partnerships  in  the  busi- 
ness of  milling,  or  mining,  or  farming;  but  unless  the  intent  of  the 
joint  owners  to  throw  their  real  estate  into  the  fund  as  partership 
stock  is  distinctly  manifested,  or  unless  the  real  property  is  bought 
out  of  the  social  funds,  for  partnership  purposes,  it  must  still  re- 
tain its  character  of  realty.'  'In  this  case,  I  see  nothing  from 
whence  to  infer  that  there  was  any  design  on  the  part  of  these  joint 
purchasers  to  convert  their  real  estate  into  partnership  stock.' " 
Brooke  v.  Washington,  8  Grat.    (Va.)   248,  56  Am.  Dec.  146. 

Seat  on  stock  exchange,  In  re  Snift,  118  Fed.  348. 

o  See  supra,  c.  6,  "Capital." 


WHAT  CONSTITUTES.  121 

belonging  to  the  firm  is  prima  facie  partnership  property,6 
even  though  the  title  is  taken  in  the  individual  name  of  one 
or  more  partners.7  Property  may,  however,  be  purchased 
with  partnership  funds,  to  be  held  by  the  partners  as  individ- 
uals, if  such  is  their  intention.8  Such  a  transaction  would 
amount  merely  to  a  withdrawal  by  mutual  agreement  of  so 
much  capital  or  profits  from  the  firm  business.     The  good 

e  Scott  v.  McKinney,  98  Mass.  344;  Cundey  v.  Hall,  208  Pa.  335; 
Foster  v.  Sargent,  72  N.  H.  170,  55  Atl.  423;  Dawson  v.  Parsons,  10 
Misc.  Rep.  (N.  Y.)  428;  Thursby  v.  Lidgerwood,  69  N.  Y.  198;  Smith 
v.  Smith,  5  Ves.  Jr.  193;  Ex  parte  Hinds,  3  De  Gex  &  S.,  613.  Land 
bought  or  improved  by  partnership  funds  is  treated  as  partnership 
property  between  the  parties.  Meason  v.  Kaine,  63  Pa.  335.  Real 
estate  purchased  with  partnership  funds  for  the  use  of  the  firm, 
althought  the  legal  title  is  in  the  member  or  members  of  the  firm 
in  whose  name  the  conveyance  is  taken,  is  in  equity  considered  as 
the  property  of  the  firm,  for  the  payment  of  its  debts,  and  for  the 
purpose  of  adjusting  the  equitable  claims  of  the  copartners  as  be- 
tween themselves.     Smith  v.  Tarlton,  2  Barb.  Ch.   (N.  Y.)   336. 

7  Traphagen  v.  Burt,  67  N.  Y.  30;  Williams  v.  Gillies,  75  N.  Y. 
197,  Burdick's  Cases,  290;  Davis  v.  Davis,  60  Miss.  615,  Burdick's 
Cases,  164;  Kruschke  v.  Stefan,  83  Wis.  373,  53  N.  W.  679,  Burdick's 
Cases,  167;  Smith  v.  Smith,  5  Ves.  193.  A  trust  results  in  favor  of 
the  other  partner  to  the  extent  of  his  interest  in  the  funds.  Crone 
v.  Crone,  180  111.  599,  54  N.  E.  605. 

s  Dyer  v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251,  wherein  the 
court  said  that  this  would  be  the  case  "where  there  is  such  an  ex- 
press agreement  at  the  time  of  the  purchase,  or  a  provision  in  the 
articles  of  copartnership,  or  where  the  price  of  such  purchase 
should  be  charged  to  the  partners  respectively  in  their  several  ac- 
counts with  the  firm.  This  would  operate  as  a  division  and  dis- 
tribution of  so  much  of  the  funds,  and  each  would  take  his  share 
divested  of  any  implied  trust."  If,  with  the  acquiescence  of  the 
members  of  a  firm,  partnership  funds  are  applied  to  the  purchase 
of  real  estate  in  the  name  of  one  member,  there  is  no  resulting 
trust.    Lefevre's  Appeal,  69  Pa.  122. 

"Land  purchased  by  a  partner  with  money  drawn  from  the  firm 
and  charged  to  his  individual  account  cannot  be  regarded  as  part- 
nership property,  never  having  been  appropriated  to  partnership 
purposes."  Louisville  Trust  Co.  v.  Columbia  Finance  &  Trust  Co., 
22  Ky.  Law  Rep.  1385,  59  S.  W.  867,  60  S.  W.  1. 


122  PARTNERSHIP  PROPERTY. 

will  of  the  partnership  business,  in  so  far  as  it  lias  a  salable 
value,  is  prima  facie  partnership  property.9 

Property  may  be  used  for  partnership  purposes,  and  yet, 
by  agreement,  remain  the  individual  property  of  one  of  the 
partners,10  as  is  m>i  infrequently  the  case  with  respect  to 
office  furniture,  trade  utensils,  and  the  like;"  for,  as  has 
been  Been,  the  mere  use  of  property,  and  not  the  property  it- 
self, may  be  contributed  as  capital.12  But  if  the  property 
itself  is  broughl  into  the  capital  stock  as  part  of  such  partner's 
contribution  to  the  joint  capital,  it  becomes  partnership  prop- 
erty, and  any  increase  in  its  value  will  belong'  to  the  firm,  and 
any  decrease  must  be  borne  by  the  firm.13 

The  ninst  difficuTl  cases  are  those  in  which  co-owners  are 
partners  in  profits  derived  from  the  common  properly.  If 
the  property  is  acquired  for  the  purpose  of  being  worked  in 
partnership,  or  is  merely  accessory  to  and  involved  in  the 
partnership  trade,  it  will  he  deemed  partnership  property; 
otherwise,   not.14     Where   several    persons  are  co-owners  of 

•■'  Wedderburn  v.  Wedderburn,  22  Beav.  104;  Slater  v.  Slater,  175 
N.  Y.  143,  67  N.  E.  224,  96  Am.  St.  Rep.  605,  61  L.  R.  A.  796. 

lopearce  v.  Pearce,  77  111.  284;  Flagg  v.  Stowe,  85  111.  164;  Cham- 
pion v.  Bostwick,  18  Wend.  (N.  Y.)  175;  Van  Voorhis  v.  Webster, 
85  Hun,  591,  33  N.  Y.  Supp.  121;  Richmond  v.  Voorhees,  10  Wash. 
316,  38  Pac.  1014;  Burdon  v.  Barkus,  4  De  Gex,  F.  &  J.  42;  Hart  v. 
Hart,  117  Wis.  639,  94  N.  W.  890. 

■  Ex  parte  Owen,  4  De  Gex  &  S.  351;  Ex  parte  Smith,  3  Mad- 
docks,  63. 

12  See  supra,  c.  6,  "Capital."  Where  it  was  agreed  that  a  commis- 
sion company  should  provide  the  free  use  of  an  elevator  to  defend- 
ant, and  pay  the  taxes  thereon,  and  that  defendant  should  furnish 
a  certain  amount  of  capital,  and  should  buy  grain  and  ship  it  to  the 
commission  company,  and  that  the  profits  should  be  divided,  it  was 
held  that  the  company  contributed  merely  the  use  of  the  elevator, 
and  not  the  elevator  itself,  to  the  enterprise.  Murphy  v.  Warren,  55 
Neb.  215,  75  N.  W.  573. 

ia  Robinson  v.  Ashton,  L.  R.  20  Eq.  25. 

«  Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078,  Burdick's 
Cases,  165,  Mechem's  Cases,  155;  Crawshay  v.  Maule,  1  Swanst.  495; 


HOW  TITLE  IS  HELD.  123 

land,  and  are  partners  merely  as  to  the  profits  made  by  the 
use  of  the  land,  and  not  as  to  the  land  itself,  other  land  pur- 
chased by  them  out  of  the  profits,  to  be  used  in  like  manner, 
will,  in  the  absence  of  an  agreement  to  the  contrary,  belong 
to  them  as  co-owners,  and  not  as  partners.15  The  acquired 
land  may,  however,  be  partnership  property,  though  the  orig- 
inal property  is  not,  if  such  is  the  intention  of  the  parties16 


How  Title  is  Held. 

69.  Partnership  personalty  may  be_  acquired,  held,  and 
transferred,  either  in  the  firm  name,  or  in_the_individual 
name  of  one  or  more  ofjthe  partners. 


70.     The  legal  title  to_  partnership  realty  cannot  bejield  in_^ 

the  firm  name,  but  must  be  held  in  the  individual  name 
of  one  or  more  of  the  partners,  cr  by  a  trustee. 


71.  It  is  immaterial  imwhose  name  the  title  to  either  realty. 
or  personalty  is  taken,  as  the  property  will  be  deemed 
partnership  property,  and  the  holder  a_  trustee  for  the 
firm. 

PersonaJI  ij. 

A  firm,  as  such,  may  acquire,  hold,  and  transfer  personal 
property  and  contract  in  reference  thereto  in  its  firm  name.17 
So,  also,  personalty  may  be  acquired  by  one  or  more  partners 

Fereday  v.  Wightwick,  Tamlyn,  250;  Waterer  v.  Waterer,  L.  R.  15 
Eq.  402;  Jackson  v.  Jackson,  9  Ves.  Jr.  591;  Davies  v.  Games,  12 
Ch.  Div.  813;  Brown  v.  Oakshot,  24  Eeav.  254;  Davis  v.  Davis  (1894), 
1  Ch.  393,  Burdick's  Cases,  12.  A  theater  building  and  its  appur- 
tenances owned  by  partners  are  partnership  property,  where  the 
partnership  business  consists  in  the  uses  to  be  made  thereof.  Priest 
v.  Chouteau,  12  Mo.  App.  252,  affirmed  85  Mo.  398. 

«  Steward  v.  Blakeway,  L.  R.  4  Ch.  App.  603,  L.  R.  6  Eq.  479. 

10  Morris  v.  Barrett,  3  Younge  &  J.  384. 

i"  See  ante,  c.  5,  "Firm  Name." 


1-24:  PARTNERSHIP  PROPERTY. 

in  their  own  name,  bu1  whicb  will  nevertheless  belong  to  the 
firm,  as  where  such  was  the  understanding  of  all  the  partners, 
or  where  is  was  purchased  out  of  partnership  funds.18  Eow- 
ever  the  title  may  lie  acquired,  the  whole  legal  ami  beneficial 
ownership  of  partnership  chattels  is  in  the  firm  as  such,  ami 
not  in  the  partners  as  individuals.19 

Realhj. 

The  principle  of  law  i-  well  settled  that  it  is  impossible  for 
a  partnership,  as  such,  to  hold  the  legal  title  to  real  estate.20 
Only  a  person  can  hold  the  legal  title  to  real  estate,  ami,  as 
has  been  seen,  a  partnership  is  not  a  legal  person.21  Where 
a  deed  is  made  to  a  partenrship  in  its  firm  name,  and  such 
firm  name  contains  the  individual  names  of  one  or  more  of 
the  partners,  the  legal  title  will  vest  in  such  of  the  partners 
as  are  named  in  the  firm  name,  and  therefore  in  the  deed,  and 
in  them  only.22     But  the  legal  title  so  vested  in  one  or  more 

is  Wolf  v.  Selling  (Super.  Ct.  N.  Y.),  25  N.  Y.  Supp.  963. 

loHendren  v.  Wing,  60  Ark.  561,  31  S.  W.  149,  Burdick's  Cases, 
161. 

sopercifull  v.  Piatt,  36  Ark.  456;  Rammelsberg  v.  Mitchell,  29 
Ohio  St.  22;  Kelley  v.  Bourne,  15  Or.  476,  16  Pac.  40;  Holmes  v. 
Jarrett,  7  Heisk.  (Tenn.)  506,  Ames*  Cas.  150.  Though  a  partner- 
ship, as  such,  possesses  no  capacity  to  take  a  conveyance  of  the 
legal  title  to  real  estate,  it  may  acquire  in  its  firm  name  a  lien  on 
real  estate  to  secure  an  indebtedness.  Barber  v.  Crowell,  55  Neb. 
571,  75  N.  W.  1109. 

-'  Tidd  v.  Rines,  26  Minn.  201,  2  N.  W.  497;  Gille  v.  Hunt,  35 
Minn.  357,  29  N.  Wr.  2;  Holmes  v.  Jarrett,  7  Heisk.  (Tenn.)  506, 
Ames'  Cas.  150. 

22  Gossett  v.  Kent,  19  Ark.  602;  Winter  v.  Stock,  29  Cal.  407; 
Woodward  v.  McAdam,  101  Cal.  438,  35  Pac.  1016,  Burdick's  Cases, 
163;  Menage  v.  Burke,  43  Minn.  211,  45  N.  W.  155;  Moreau  v.  Saf- 
farans,  3  Sneed  (Tenn.)  595;  Holmes  v.  Jarrett,  7  Heisk.  (Tenn.) 
506,  Ames'  Cas.  150;  Riddle  v.  Whitehill,  135  U.  S.  621.  The  mere 
fact  that  the  given  or  Christian  names  of  the  partners  do  not  ap- 
pear does  not  render  the  deed  void  for  uncertainty  as  to  the  grant- 
ees, but  parol  evidence  is  admissible  to  show  who  were  intended  to 


HOW  TITLE  IS  HELD.  125 

individual  members  of  the  firm  is  held  by  them  as  trustees 
for  the  partnership.23  In  the  view  of  equity,  it  is  immaterial 
in  whose  name  the  legal  title  of  the  property  stands, — whether 
in  the  individual  name  of  a  copartner,  or  in  the  joint  names 
of  all.  The  possessor  of  the  legal  title  holds  the  property  in 
trust  for  the  purposes  of  the  partnership,24  and  the  property 
is  deemed  partnership  property,  and  is  subject  to  all  the  in- 
cidents thereof.25 

be  grantees.  Holmes  v.  Jarrett,  7  Heisk.  (Tenn.)  506,  Ames'  Cas. 
150;  Ward  v.  Espy,  6  Humph.  (Term.)  447.  Where  the  firm  name 
does  not  contain  the  name  of  any  individual  partner,  the  title  re- 
mains in  the  grantor,  but  in  trust  for  the  firm.  Tidd  v.  Rines,  26 
Minn.  201,  2  N.  W.  497. 

It  has  been  held  in  a  few  jurisdictions  that  a  conveyance  to  a 
firm,  in  which  the  grantee  is  designated  by  its  firm  name,  conveys 
the  legal  title  to  the  property  to  those  who  use  that  "style  and 
firm."  Brunson  v.  Morgan,  76  Ala.  593;  Hoffman  v.  Porter,  2  Brock. 
158,  Fed.  Cas.  No.  6,577;  Jones  v.  Neale,  2  Pat.  &  H.  (Va.)  339; 
Maugham  v.  Sharpe,  17  C.  B.  (N.  S.)  443,  Burdick's  Cases,  160. 
Mr.  Burdick  (Partn.  p.  81)  approves  of  this  view,  upon  the  ground 
that  it  is  unnecessary  to  designate  the  grantee  by  name  if  he  is 
otherwise  sufficiently  described,  and  a  firm  name  is  a  sufficient  de- 
scription because  "id  certum  est  quod  certum  reddi  potest." 

23  Holmes  v.  Jarrett,  7  Heisk.  (Tenn.)  506,  Ames'  Cas.  150;  Moreau 
v.  Saffarans,  3  Sneed  (Tenn.)  599.  Such  a  resulting  trust  may  be 
established  by  parol.  Kringle  v.  Rhomberg,  120  Iowa,  472,  94  N.  W. 
1115. 

24  Gray  v.  Palmer,  9  Cal.  616;  Dupuy  v.  Leavenworth,  17  Cal.  262; 
Faulds  v.  Yates,  57  111.  416;  Railsback  v.  Lovejoy,  116  111.  442,  6  N.  E. 
504;  Bopp  v.  Fox,  63  111.  540;  Pepper  v.  Pepper,  24  111.  App.  316; 
Allison  v.  Perry,  130  111.  9,  22  N.  E.  492;  Paige  v.  Paige,  71  Iowa, 
318,  32  N.  W.  360,  Mechem's  Cases,  170;  Harris  v.  Harris,  153  Mass. 
439,  26  N.  E.  1117;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas. 
251;  Delmonico  v.  Guillaume,  2  Sandf.  Ch.  (N.  Y.)  366,  Burdick's 
Cases,  161;  Williams  v.  Gillies,  75  N.  Y.  197,  Burdick's  Cases,  290; 
Riddle  v.  Whitehill,  135  U.  S.  621;  Shanks  v.  Klein,  104  U.  S.  18, 
Mechem's  Cases,  164,  Paige's  Cas.  136. 

25  Jones  v.  Davies,  60  Kan.  309;  Spalding  v.  Wilson,  80  Ky.  589. 
Dyer  v.  Clark,  5  Mete.  (Mass.)  562;  Messer  v.  Messer,  59  N.  H.  375; 
Ross  v.  Henderson,  77  N.  C.  170;  Riddle  v.  Whitehill,  135  U.  S.  621; 
Crawshay  v.  Maule,  1  Swanst.  530,  19  Eng.   Rul.  Cas.   484.     Land 


120  PARTNERSHIP  PROPERTY. 

A  bona  fide  purchaser  for  value,  and  without  notice  from 
the  partner  who  holds  the  Legal  title,  takes  the  title  discharged 
of  any  trust  in  favor  of  the  firm  or  its  creditors.28  But  if 
sueli  purchaser  had  notice  that  the  property  was  in  fact  part- 
nership property,  or  if,  being  without  notice,  he  did  not  part 
with  value  upon  the  faith  of  the  apparent  title  in  his  gran- 
tor, he  takes  the  title  subject  to  the  trust  or  charge  in  favor 
of  tin1  firm  and  its  creditors.27 

may  belong  to  a  partnership,  although  held  in  the  name  of  one 
partner.  Williams  v.  Shelden,  61  Mich.  311,  28  N.  W.  115.  It  is  im- 
material in  whom  the  legal  estate  is  vested, — whether  in  one  of  the 
partners  or  in  all.  It  is  equally  partnership  property,  and  a  court 
of  equity  will  deal  with  it  as  such.  Darby  v.  Darby,  3  Drewry,  495, 
Ames'  Cas.  177.  Where  land  is  purchased  with  joint  funds,  and  for 
partnership  purposes,  it  becomes  firm  property,  though  the  title  be 
held  by  one  of  the  partners  in  his  own  name;  and  judgments 
against  the  firm  are  payable  out  of  the  proceeds  thereof,  in  prefer- 
ence to  individual  judgments.  Erwin's  Appeal,  39  Pa.  535;  West 
Hickory  Min.  Ass'n  v.  Reed,  80  Pa.  38.  And  see  Black  v.  Seipt,  34 
Leg.  Int.  (Pa.)  66.  Real  estate  put  into  the  partnership  by  one  of 
the  parties  at  an  agreed  valuation  becomes  partnership  property 
without  a  conveyance  from  the  owner,  and  such  owner  holds  the 
legal  title  in  trust  for  the  partnership  as  assets  of  the  partnership 
estate.     Wiegand  v.  Copeland.  14  Fed.  118. 

28  McNeil  v.  First  Congregational  Soc,  66  Cal.  105,  4  Pac.  1096; 
Robinson  Bank  v.  Miller,  153  111.  244,  38  N.  E.  1078,  Burdick's  Cases, 
165,  Mechem's  Cases,  155;  McMillan  v.  Hadley,  78  Ind.  590;  Hiscock 
v.  Phelps,  49  N.  Y.  97. 

-"  Goldthwait  v.  Janney,  102  Ala.  431,  15  So.  560,  Burdick's  Cases, 
176;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251;  Mattlack 
v.  James,  13  N.  J.  Eq.  126;  Page  v.  Thomas,  43  Ohio  St.  38,  1  N.  E. 
79.  It  is  a  legal  presumption  that  a  firm's  possession  of  realty  is 
subordinate  to,  and  consistent  with,  the  record  title  in  an  individual 
member.  Hardin  v.  Dolge,  46  App.  Div.  416,  61  N.  Y.  Supp.  753. 
There  may  be  a  dormant  partnership  in  the  purchase  and  sale  of 
real  estate  as  between  the  partners  themselves,  but,  as  between  the 
partners  and  third  persons,  the  law  in  regard  to  dormant  partners 
will  not  apply.    Gray  v.  Palmer,  9  Cal.  616. 

Where  there  is  a  conveyance  of  firm  land,  by  consent,  to  one  of 
the  partners,  and  the  deed  is  recorded,  but  is  accompanied  by  no 
agreement  disclosing  the  interest  of  the  other,  and  money  is  bor- 


NATURE  OF  PARTNER'S  INTEREST.  127 

The  best  method  of  conveying  real  estate  to  a  firm  is  to 
name  all  the  partners  in  the  deed  as  grantees,  describing 
them  as  doing  business  as  partners  under  a  designated  firm 
name,  and  expressly  declaring  that  the  grantees  are  to  hold 
the  title  as  such  partners,  and  for  partnership  purposes. 
Where  this  is  clone,  no  question  can  arise  as  to  whether  the 
property  is  partnership  or  individual  property,  and  no  subse- 
quent purchaser  can  claim  to  have  purchased  without  knowl- 
edge of  its  partnership  character.28 


Nature  of  Partner's  Interest. 

72.  The  interest  of  partners  in  partnership  property  is 
neither  that  of  tenants  in  common  nor  joint  tenants,  but, 
is  sui  generis.  J  'ijhi   /hai^l.   klsrJS'. 


73.  The  share  of  a  partner  at  any  given  time  is  the  propor- 
tion of  the  then  existing  assets  to  which  he  would  be 
entitled  after  the  discharge  of  all  the  then  existing 
debts. 

The  interest  of  partners  in  the  partnership  property  is  a 
peculiar  one.  The  recognized  incidents  attaching  to  such 
property  differ  in  so  many  respects  from  those  attaching  to 
other  forms  of  collective  holding  recognized  in  the  law  that  it 
is  misleading  to  attempt  to  assimilate  a  holding  in  partner- 
ship to  any  of  them.     An  estate  in  partnership  has  many  of 

rowed  by  the  grantee  in  the  deed  on  his  personal  judgment  bill, 
which  is  entered  of  record  against  the  land  as  he  then  held  it,  no 
averment  of  any  right  by  parol,  or  by  secret  agreement  in  writing, 
can  stamp  the  land  as  firm  property,  and  thus  destroy  the  lien  of 
the  judgment  creditor.  Gunnison  v.  Erie  Dime  Sav.  &  Loan  Co.,  157 
Pa.  303,  27  Atl.  747,  33  W.  N.  C.  (Pa.)  303.  See,  also,  J.  Pars.  Partn. 
8  111,  and  compare  Page  v.  Thomas,  43  Ohio  St.  38,  1  N.  E.  79. 

28Mechem,  Partn.  §  104;  Lauffer  v.  Cavett,  87  Pa.  479;  Davis  v. 
Davis,  60  Miss.  615,  Burdick's  Cases,  164. 


128  PARTNERSHIP  PROPERTY. 

the  characteristics  of  estate's  in  common  and  in  joint  tenancy, 
but  partners  arc  neither  tenants  in  common  nor  joint  ten- 
ants."' If  partners  were  tenants  in  common,  a  sale  or  trans- 
fer of  one  partner's  interest  in  the  firm  property  would  vest 
in  the  transferee  an  undivided  interest  in  such  property;  but 
it  is  well  settled  that  a  partner  cannot  so  transfer  an  undi- 
vided interest  in  any  specific  article  belonging  to  the  firm;30 
and  a  transfer  of  his  interest,  either  by  voluntary  act  or  by 
legal  process,  merely  entitles  the  transferee  to  receive  such 
partner's  share  of  what  may  remain  after  a  settlement  of  the 
partnership  affairs,  and  the  payment  of  all  the  partnership 
debts.31  On  the  other  hand,  a  partner  may  sell  specific  part- 
nership property  so  as  to  pass  the  entire  title  to  the  vendee;. 
whereas,  if  a  tenant  in  common  should  attempt  to  sell  the  en- 
tire common  property,  only  his  own  undivided  interest  would 
pass.32     So,  also,  upon  the  death  of  a  partner,  the  firm  assets 

-•o  Hubbardston  Lumber  Co.  v.  Covert,  35  Mich.  254;  Hutchinson 
v.  Dubois,  45  Mich.  143,  7  N.  W.  714;  Kramer  v.  Arthurs,  7  Pa.  165; 
Preston  v.  Fitch,  137  N.  Y.  41,  33  N.  E.  77;  Kruschke  v.  Stefan,  83 
Wis.  373,  53  N.  W.  679,  Burdick's  Cases,  167. 

soNichol  v.  Stewart,  36  Ark,  612;  Pratt  v.  McGuinness,  173  Mass. 
170,  53  N.  E.  380. 

si  Sanborn  v.  Royce,  132  Mass.  594;  Collins'  Appeal,  107  Pa.  590; 
Durborrow's  Appeal,  84  Pa.  404;  Kenneweg  v.  Schilansky,  45  W.  Va. 
521,  31  S.  E.  949;  Bank  v.  Carrollton  R.  Co.,  11  Wall.  (U.  S.)  624, 
Mechem's  Cases,  147;  Ex  parte  Ruffin,  6  Ves.  119,  Burdick's  Cases, 
192,  19  Eng.  Rul.  Cas.  628;  West  v.  Skip,  1  Ves.  Ser.  240,  19  Eng. 
Rul.  Cas.  621.  An  assignee,  therefore,  or  separate  creditor,  of  one- 
partner,  is  entitled  only  to  the  share  of  each  partner,  after  a  set- 
tlement of  the  accounts,  and  after  all  the  just  claims  of  the  other 
partner  are  satisfied.  Nicoll  v.  Mumford,  4  Johns.  Ch.  (N.  Y.)  522. 
The  transferee  does  not  become  a  tenant  in  common  with  the  other 
partners.  Bank  v.  Carrollton  R.  Co.,  11  Wall.  (U.  S.)  624,  Mechem's 
Cases,  147;  Donaldson  v.  State  Bank,  1  Dev.  Eq.  (N.  C.)  103. 

32  Shearer  v.  Shearer,  98  Mass.  107,  Ames'  Cas.  185;  Person  v. 
Wilson,  25  Minn.  189;  Mersereau  v.  Norton,  15  Johns.  (N.  Y.)  180; 
Thursby  v.  Lidgerwood,  69  N.  Y.  198;  Thompson  v.  Bowman,  6  WalL 
(U.  S.)  316. 


NATURE  OF  PARTNER'S  INTEREST.  129 

vest  in  the  survivors,  to  the  exclusion  of  the  deceased  part- 
ner's representatives  ;33  and  in  this  respect,  an  estate  in  part- 
nershij)  approximates  a  joint  tenancy,  rather  than  a  tenancy' 
in  common,  but  that  it  is  not  a  joint  tenancy  is  apparent  from- 
the  fact  that  this  right  of  survivorship  is  not  a  beneficial 
right.  The  survivor  takes  the  assets  charged  with  a  trust, 
or  quasi  trust,34  to  pay  the  firm  debts,   and  wind  up  its 

33  Smith  v.  Wood,  31  Md.  293;  Dyer  v.  Clark,  5  Mete.  (Mass.) 
562,  Ames'  Cas.  251;  Holbrook  v.  Lackey,  13  Mete.  (Mass.)  132, 
Ames'  Cas.  160;  Bush  v.  Clark,  127  Mass.  Ill;  Bassett  v.  Miller,  39 
Mich.  133,  Ames'  Cas.  162;  Merritt  v.  Dickey,  38  Mich.  41;  Barry 
v.  Briggs,  22  Mich.  201;  Shanks  v.  Klein,  104  U.  S.  18,  Mechem's 
Cases,  164;  Clay  v.  Freeman,  118  U.  S.  97;  Newell  v.  Townsend,  6 
Sim.  419,  Ames'  Cas.  154;  Martin  v.  Crump,  2  Salk.  444,  1  Ld.  Raym. 
340,  Ames'  Cas.  153;  Rees  v.  Duncan,  21  Australian  Law  Times,  205 
(Victoria).  But  see  Buckley  v.  Barber,  Exch.  164,  Ames'  Cas.  154. 
See,  also,  infra,  c.  11,  "Dissolution."  An  execution  cannot  be  levied 
upon  partnership  goods  for  the  individual  debt  of  a  partner,  after 
the  death  of  such  partner,  because  the  property  in  the  goods  there- 
upon vests  in  the  survivor.  Newell  v.  Townsend,  6  Sim.  419,  Ames' 
Cas.  154.  The  whole  property  in  the  partnership  estate  accrues  to 
the  surviving  partner,  and  he  is  the  owner  thereof,  both  at  com- 
mon law  and  in  equity.  Knox  v.  Gye,  L.  R.  5  H.  L.  Cas.  656,  Ames' 
Cas.  163.  The  time  of  dissolution  fixes  the  time  at  which  the  ac- 
count is  to  be  taken  in  order  to  ascertain  the  amount  of  a  partner's 
share.  However  long  it  may  be  before  a  final  settlement  may  be 
had,  when  made,  it  must  relate  back  to  the  time  of  dissolution  to 
determine  the  relative  interests  of  the  partners  in  the  fund.  Dyer 
v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251.  The  surviving  part- 
ner must  sue  alone  upon  choses  in  action  belonging  to  the  firm, 
and  the  personal  representatives  of  the  deceased  partner  cannot  be 
joined.  Bassett  v.  Miller,  39  Mich.  133,  Ames'  Cas.  162;  Willson  v. 
Nicholson,-  61  Ind.  241;  Daby  v.  Ericsson,  45  N.  Y.  786;  Stafford 
v.  Gold,  9  Pick.  (Mass.)  533.  See,  also,  infra,  chap.  10,  'Actions." 
The  surviving  partner  is  the  real  party  in  interest  to  a  demand 
owned  by  or  due  to  the  firm.     Daby  v.  Ericsson,  45  N.  Y.  786. 

34  Hill  v.  Draper,  54  Ark.  395,  15  S.  W.  1025;  Jones  v.  Dexter,  130 
Mass.  380;  Russell  v.  McCall,  141  N.  Y.  437,  39  N.  E.  498,  Burdick's 
Cases,  256;  Knox  v.  Gye,  L.  R.  5  H.  L.  Cas.  656.  "The  surviving 
partner  is  often  called  a  'trustee,'  but  the  term  is  used  inaccurately. 
He  is  rot  a  trustee,   either  expressly  or  by   implication.     On   the 

9 


130  PARTNERSHIP  PROPERTY. 

affairs,  and  he  must  account  to  the  representatives  of  his  de- 
cease* 1  partner  for  all  the  firm  assets.35 

death  of  a  partner,  the  law  confers  on  his  representatives  certain 
rights  as  against  the  surviving  partner,  and  imposes  upon  the  latter 
correspondent  obligations.  The  surviving  partner  may  be  called,  so 
far  as  these  obligations  extend,  a  trustee  for  the  deceased  partner; 
but  when  these  obligations  have  been  fulfilled,  or  are  discharged, 
or  terminate  by  law,  the  supposed  trust  is  at  an  end.  *  *  *  The 
surviving  partner  may  be  called  a  trustee  for  the  dead  man,  but 
the  trust  is  limited  to  the  discharge  of  the  obligation,  which  is  lia- 
ble to  be  barred  by  lapse  of  time, — as  between  an  express  trustee 
and  the  cestui  que  trust  time  will  not  run;  but  the  surviving  part- 
ner is  not  a  trustee,  in  that  full  and  proper  sense  of  the  word.  It 
is  most  necessary  to  mark  this  again  and  again,  for  there  is  not  a 
more  fruitful  source  of  error  in  law  than  the  inaccurate  use  of  lan- 
guage. *  *  *  The  mistaken  phrase  that  a  surviving  partner  is 
a  trustee,  and  that  therefore  no  time  can  run  as  between  him  and 
the  representative  of  the  deceased  partner,  has  led  to  what  I  humbly 
conceive  to  be  the  error  in  the  judgmnt  originally  given."  Knox  v. 
Gye,  L.  R.  5  H.  L.  Cas.  656,  Ames'  Cas.  163. 

In  Taylor  v.  Taylor,  28  Law  Times  (N.  S.)  189,  Ames'  Cas.  172, 
note,  James,  L.  J.,  said:  "The  law  is  that  the  right  of  a  surviving 
partner  to  the  partnership  assets  is  absolute.  The  right  of  the  legal 
personal  representatives  of  the  deceased  partner  is  to  an  account 
merely  of  the  partnership  assets;  and  to  the  taking  of  that,  as  to 
the  taking  of  any  other  account,  the  statute  of  limitations  applies. 
The  case  of  Knox  v.  Gye  was  strongly  approved. 

35  Dyer  v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251;  Holbrook 
v.  Lackey,  13  Mete.  (Mass.)  132,  Ames'  Cas.  160;  Strauss  v.  Fred- 
erick, 91  N.  C.  121;  Rees  v.  Duncan,  21  Australian  Law  Times,  205 
(Victoria);  West  v.  Skip,  1  Ves.  Sr.  p.  242,  19  Eng.  Rul.  Cas.  622; 
Jeffereys  v.  Small,  1  Vern.  217.  Ames'  Cas.  152;  Lake  v.  Gibson,  1 
Eq.  Cas.  Abr.  290,  pi.  3;  Martin  v.  Crump,  2  Salk.  444,  1  Ld.  Raym. 
340,  Ames'  Cas.  153.  It  is  not  necessary  to  provide  against  sur- 
vivorship in  the  partnership  articles.  Jeffereys  v.  Small,  1  Vern. 
217,  Ames'  Cas.  152.  The  right  of  the  deceased  partner's  represen- 
tative consists  in  having  an  account  of  the  property,  of  its  collec- 
tion and  application,  and  in  receiving  that  portion  of  the  clear  bal- 
ance which  accrues  to  the  deceased's  share  and  interest  in  the  part- 
nership. Knox  v.  Gye,  L.  R.  5  H.  L.  Cas.  656,  Ames'  Cas.  163.  The 
good-will  in  a  partnership  business  does  not,  on  the  death  of  one 
partner,  survive  beneficially  to  the  others.    When  it  has  any  value, 


NATURE  OF  PARTNER'S  INTEREST.        131 

The  real  and  actual  interest  of  each  partner  in  the  part- 
nership stock  is  the  net  balance  which  will  be  coming  to  him 
after  payment  of  all  the  partnership  debts,  and  a  just  settle- 
ment of  the  account  between  himself  and  his  partners.36 

As  has  been  seen,  the  legal  title  to  real  estate  cannot  be 
held  by  the  firm,  as  such.36a  Where  the  legal  title  to  realty 
is  vested  in  more  than  one  partner,  is  is  held  by  them  as  ten- 
ants in  common,37  but  in  equity  it  is  chargeable  with  the 
partnership  debts,  and  with  any  balance  which  may  be  due 
from  one  partner  to  another  upon  winding  up  the  affairs  of 

a  due  proportion  belongs  to  the  estate  of  the  deceased  partner,  but 
the  surviving  partner  has  still  the  right  to  carry  on  the  same  busi- 
ness, and  at  the  same  place.  Smith  v.  Everett,  27  Beav.  446,  29  L.  J. 
Ch.  236,  19  Eng.  Rul.  Cas.  649. 

seNoonan  v.  Nunan,  76  Cal.  44,  18  Pac.  98;  Filley  v.  Phelps,  18 
Conn.  294;  Carter  v.  Bradley,  58  111.  101;  Bopp  v.  Fox,  63  111.  540; 
Sindelare  v.  Walker,  137  111.  43,  27  N.  E.  59,  Burdick's  Cases,  304, 
Mechem's  Cases,  154;  Tobey  v.  McFarlin,  115  Mass.  98;  Dyer  v. 
Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251;  Hutchinson  v.  Dubois, 
45  Mich.  143,  7  N.  W.  714;  Staats  v.  Bristow,  73  N.  Y.  264,  Mechem's 
Cases,  152,  Paige,  Cas.  106;  Menagh  v.  Whitwell,  52  N.  Y.  146,  Bur- 
dick's Cases,  222,  Ames'  Cas.  229;  Nicoll  v.  Mumford,  4  Johns.  Ch. 
(N.  Y.)  522;  Ludlow's  Heirs  v.  Cooper's  Devisees,  4  Ohio  St.  10; 
Kenneweg  v.  Schilansky,  45  W.  Va.  521,  31  S.  E.  949;  Bank  v.  Car- 
rollton  R.  Co.,  11  Wall.  (U.  S.)  624,  Mechem's  Cases,  147;  Case  v. 
Eeauregard,  99  U.  S.  119,  Mechem's  Cases,  440;  West  v.  Skip,  1  Ves. 
Sr.  241,  19  Eng.  Rul.  Cas.  621;  Ex  parte  Ruffin,  6  Ves.  119,  Burdick's 
Cases,  192,  19  Eng.  Rul.  Cas.  628.  A  partner's  interest  is  a  chose  in 
action,  i.  e.,  a  jus  in  personam,  and  his  claim  is  accordingly  barred 
by  the  statute  of  limitations  applicable  to  personal  actions.  Knox  v. 
Gye,  L.  R.  5  H.  L.  Cas.  656,  Ames'  Cas.  163. 

sea  See  §  56,  ante. 

•"Pepper  v.  Pepper,  24  111.  App.  316;  Thayer  v.  Lane,  Walk. 
(Mich.)  200;  Fountain  v.  Hutchinson,  108  Mich.  596,  66  N.  W.  477; 
Coles  v.  Coles,  15  Johns.  (N.  Y.)  159;  Greene  v.  Graham,  5  Ohio, 
264;  Alabama  Marble  &  Stone  Co.  v.  Chattanooga  Marble  &  Stone 
Co.  (Tenn.  Ch.),  37  S.  W.  1004.  The  legal  title  is  in  the  partners  as 
tenants  in  common  and  the  equitable  title  is  in  the  firm.  Hartnett 
v.  Stillwell,  121  Ga.  386,  49  S.  E.  276. 


132  PARTNERSHIP  PROPERTY. 

the  firm.38  Upon  the  death  of  a  partner  in  whom  the  legal 
title  to  real  estate  is  rested,  the  Legal  title  descends  to  hi* 
heirs,  and  does  nol  pass  to  the  surviving  partners,  as  in  the 

.■:i-r  of  [icrsniiallv.  Ilul  the  equitable  title  or  beneficial  in- 
terest does  pass  to  the  survivors  for  the  purpose  of  settling 
up  the  partnership,  and  the  heirs  will  hold  the  legal  title  in 
trusl  for  thai  purpose.30  It  follows  therefore,  thai  a  part- 
ner's real  beneficial  interest  in  firm  realty  stands  upon  the 
same  footing  with  his  interest  in  the  personalty.  In  either 
case,  ii  is  simply  a  right  to  share  in  what  may  remain  after 
winding  up  the  partnership,  and  paying  all  its  debts.40 

ssBuchan  v.  Sumner,  2  Barb.  Ch.  (N.  Y.)  165;  Smith  v.  Tarlton, 
2  Barb.  Ch.  (N.  Y.)  336;  Buckley  v.  Buckley,  11  Barb.  (N.  Y.)  43. 
Compare  Coster  v.  Clarke,  3  Edw.  Ch.  (N.  Y.)  428. 

■Tillinghast  v.  Champlin,  4  R.  I.  173;  Shanks  v.  Klein,  104  U.  S. 
18,  Mechem's  Cases,  164;  Walling  v.  Burgess,  122  Ind.  299;  Van 
Aken  v.  Clark,  82  Iowa,  256,  48  N.  W.  73;  Delmonico  v.  Guillaume, 
2  Sandf.  Ch.  (N.  Y.)  366,  Burdick's  Cases,  161.  The  surviving  part- 
ner takes  real  estate  only  so  far  as  in  equity  it  has  the  character 
of  personalty,  and  this  is  so  far,  and  so  far  only,  as  may  be  neces- 
sary for  the  payment  of  the  partnership  debts.  Strong  v.  Lord,  107 
111.  25. 

Real  estate  purchased  and  held  by  a  partnership  firm  for  the  pur- 
poses of  the  firm  so  far  partakes  of  the  character  of  personalty  that 
it  is  under  the  control  of  a  court  of  equity  in  making  a  final  adjust- 
ment of  the  affairs  of  the  partnership,  whether  in  stating  an  ac- 
count between  the  partners  or  in  marshalling  the  assets  for  the 
payment  of  debts.  The  realty  being  impressed  with  this  character, 
as  assets  of  the  firm,  a  court  of  equity  has  the  power  to  vest  in  a 
surviving  partner  the  discretion  to  dispose  of  it  at  public  or  private 
sale.    Mauck  v.  Mauck,  54  111.  281. 

«Bopp  v.  Fox,  63  111.  540;  Simpson  v.  Leech,  86  111.  286;  Trow- 
bridge v.  Cross,  117  111.  109,  7  N.  E.  347;  Henry  v.  Anderson,  77 
Ind.  361;  Du  Bree  v.  Albert,  100  Pa.  483;  Kruschke  v.  Stefan,  83 
Wis.  373,  53  N.  W.  679,  Burdick's  Cases,  167.  A  sale  of  partnership 
real  estate  by  order  of  the  orphan's  court,  for  the  payment  of  a  de- 
ceased partner's  debts,  does  not  pass  the  interest  of  the  firm,  though 
the  legal  title  was  in  the  decedent  alone.  McCormick's  Appeal,  57 
Pa.  54.  See  Jones'  Appeal,  70  Pa.  169.  Compare  Rees  v.  Duncan,. 
21  Australian  Law  Times,  205  (Victoria). 


NATURE  OF  PARTNER'S  INTEREST.  133 


Same— Sale  oe  Partition. 

74.     A  partner  is  entitled  to  insist  "P""  a  sale,  but  not  a 
partition,  of  partnership  property. 

Upon  the  dissolution  of  a  partnership,  all  the  property  be- 
longing  to  the  partnership  must  be  sold,  and  the  proceed^, 
after  discharging  all  the  partnership  debts  and  liabilities, 
must  be  divided  among  the  partners  according  to  their  respec- 
tive shares  in  the  capital.41  jSTo  one  partner  has  a  right  to 
insist  that  any  particular  part  or  item  of  the  partnership 
property  shall  remain  unsold,  and  that  he  shall  retain  his 
share  of  it  in  specie.42  In  other  words,  a  partner  can  compel 
a  sale,  but  not  a  partition  of  the  partnership  property.43 

In  regard  to  personal  property,  the  rule  that  it  is  to  be  in 
all  cases  converted  into  money  for  distribution  is  undoubtedly 
well  established  and  entirely  uniform  everywhere.  In  this, 
equity  follows  the  analogies  of  the  law.44 

In  regard  to  real  estate,  there  is  some  conflict  of  decision. 
In  some  cases  it  is  held  that,  so  long  as  the  debts  of  the  part- 
nership remain  unliquidated,  a  partition  will  not  be  decreed, 
and  that  the  only  method  by  which  a  partner,  under  such  con- 
ditions, can  compel  a  division  of  the  firm  property,  is  by  a 
bill  to  administer  and  settle  the  partnership  affairs.45     But 

41  Darby  v.  Darby,  3  Drewry,  495,  Ames'  Cas.  177. 

42  Darby  v.  Darby,  3  Drewry,  495,  Ames'  Cas.  177,  citing  Crawshay 
v.  Collins,  15  Ves.  218,  and  Featherstonhaugh  v.  Fenwick,  17  Ves. 
298. 

43  Lyman  v.  Lyman,  2  Paine,  11,  Fed.  Cas.  No.  8,628;  Sigourney 
v.  Munn,  7  Conn.  11;  Pierce's  Adm'r  v.  Trigg's  Heirs,  10  Leigh  (Va.) 
406;  Wild  v.  Milne,  26  Beav.  504,  Burdick's  Cases,  166,  Ames'  Cas. 
173. 

44  Shearer  v.  Shearer,  98  Mass.  107,  Ames'  Cas.  185. 
45Molineaux  v.  Raynolds,  54  N.  J.  Eq.  559,  35  Atl.  536,  Burdick's 

Cases,  169.    Lands  purchased  by  a  partnership  for  development  and 


134  PARTNERSHIP  PROPERTY. 

where  there  are  no  unpaid  debts  of  the  firm  outstanding,  it  is 
held  thai  a  partner  may  have  a  partition  in  kind,46  and  where 
a  sale  would  work  injustice  a  partner  may  pay  all  outstand- 
ing dolus  and  insisl  on  such  a  partition.46*  In  other  cases  it 
is  held,  and  this  is  ihe  settled  English  view,  that,  upon  the 
dissolution  "i-  termination  of  a  partnership,  any  one  of  the 
partners  is  entitled  to  have  the  whole  of  the  assets  disposed 
of  by  sale,  irrespective  of  whether  there  are  any  debts  to  be 
provided  for  or  not,  and  thai  a  partner  cannot  claim  a  par 
tition  of  the  property  under  any  circumstances.47 

To  prevent  a  sale  of  the  •  partnership  effects,  it  is  fre- 
quently provided  in  the  articles  of  copartnership  that,  upon 
a  dissolution  of  the  partnership  by  the  death,  notice,  mis- 
sale  are  not  subject  to  partition  among  the  partners  at  the  request 
of  one  of  the  number,  if  such  partition  would  hinder  the  venture, 
until  the  object  of  the  partnership  has  been  attained,  or  proved  im- 
practicable. Craighead  v.  Pike  (N.  J.  Ch.),  38  Atl.  296.  Land  pur- 
chased with  partnership  funds,  and  title  taken  to  partners.  One 
dies.  Held,  that  the  land  was  held  as  tenants  in  common,  and  the 
part  of  the  deceased  descended  to  his  heirs,  and,  being  sold  under 
order  of  court,  purchaser  is  entitled  to  partition.  Greene  v.  Gra- 
ham, 5  Ohio,  264.  Cited  in  Ludlow's  Heirs  v.  Cooper's  Devisees,  4 
Ohio  St.  8. 

";  Molineaux  v.  Raynolds,  54  N.  J.  Eq.  559,  35  Atl.  536,  Burdick's 
Cases,  169.  Real  property  which  constitutes  the  stock  in  trade  of 
a  partnership  that  has  no  outstanding  debts  or  liabilities  may,  upon 
the  application  of  part  of  the  firm,  be  divided  among  the  partners 
according  to  their  respective  interests  therein.  Patterson  v.  Blake, 
12  Ind.  436.  Equity  cannot  be  invoked  to  convert  all  real  estate 
into  personalty  for  the  mere  purpose  of  a  division  in  the  interest 
of  one  class  of  representatives  of  a  deceased  partner  against  an- 
other class  of  representatives  of  the  same  partner.  Shearer  v. 
Shearer,  98  Mass.  107,  Ames'  Cas.  185. 

«a  Kelley  v.  Shay,  206  Pa.  208,  55  Atl.  925. 

'-  Wild  v.  Milne,  26  Beav.  504,  Ames'  Cas.  173,  Burdick's  Cases, 
166,  citing  Crawshay  v.  Maule,  1  Swanst.  518;  Cook  v.  Collingridge, 
Jac.  607,  27  Beav.  456,  19  Eng.  Rul.  Cas.  634;  Featherstonhaugh  v. 
Fenwick,  17  Ves.  298,  19  Eng.  Rul.  Cas.  570.  The  executors  of  the 
deceased  partner  have  a  right  to  insist  on  a  sale  of  every  portion 


SHARE  OF  EACH  PARTNER.  135 

conduct,  or  bankruptcy  of  one  partner,  the  others  shall  be 
entitled  to  take  his  share  at  a  valuation  in  a  manner  pre- 
scribed.48 

Proportionate  Share  of  each  Partner. 

75.  The  relative  shares  to  which  each  partner  is  entitled  in 
the  partnership  property  is  regulated  by  their  agree- 
ment. 

76.  In  the  absence  of  poof  of  a  different  agreement,  the 
shares  of  all  the  partners  will  be  presumed  to  be  equal.. 


The  rules  as  to  the  distribution  and  return  of  capital  upon 
the  dissolution  of  a  firm  have  been  already  considered.49 
Whatever  remains  after  the  return  of  the  capital  constitutes 
profits,  and  is  to  be  shared  by  the  partners  in  accordance 
with  the  agreement  therefor  in  the  articles  of  partnership.50 

of  the  partnership  property.  Knox  v.  Gye,  L.  R.  5  H.  L.  Cas.  656, 
Ames'  Cas.  163,  per  Lord  Chancellor.  Compare  Shearer  v.  Shearer, 
98  Mass.  107,  Ames'  Cas.  185. 

48  Wilson  v.  Greenwood,  1  Swanst.  471;  Burfield  v.  Rouch,  31 
Beav.  241;  Homfray  v.  Fothergill,  L.  R.  1  Eq.  567.  See,  also,  Cook 
v.  Collingridge,  Jac.  607,  19  Eng.  Rul.  Cas.  634.  "Where  the  articles 
do  not  present;;  the  terms,  the  law  ascertains  what  shall  be  the  con- 
sequence of  dissolution,  viz.,  that  the  whole  of  the  joint  property 
must  be  sold  off,  and  the  whole  concern  wound  up."  Featherston- 
haugh  v.  Fenwick,  17  Ves.  308,  19  Eng.  Rul.  Cas.  578. 

40  See  ante,  c.  6,  "Capital."  The  doctrine  under  consideration 
"must  be  kept  distinct  from  divisions  of  capital  and  repayment  of 
capital  on  winding  up.  It  relates  only  to  dividing  profit  and  loss, 
but  does  not  alter  the  treatment  of  capital,  as,  if  a  debt,  to  be  first 
paid  before  profits  are  divided,  and,  in  case  of  impairment,  to  be 
repaid,  less  the  equalization  of  losses."    Bates,  Partn.  §  181. 

soTaft  v.  Schwamb,  80  111.  289,  Burdick's  Cases,  577;  Taylor  v. 
Coffing,  18  111.  422.  Of  course  there  is  nothing  to  prevent  the  par- 
ties from  making  such  an  agreement  as  they  choose  with  regard  to 
the  sharing  of  profit  and  loss.  Paul  v.  Cullum,  132  U.  S.  539;  Welsh 
v.  Canfield,  60  Md.  469;   Fleischmann  v.  Gottschalk,  70  Md.  523,  17 


130  PARTNERSHIP  PROPERTY. 

In  the  absence  of  any  proof  as  to  what  the  agreement  of  the 
partners  was  upon  this  point,  it  will  be  presumed  that  the 
profits  and  losses  were  to  be  divided  equally.51  This  pre- 
sumption <'t'  equality  prevails,  whether  the  partners  have  con- 
tributed  to  the  capita]  equally  or  unequally,  whether  they  are 
or  are  no!  on  a  par  as  regards  skill,  connection,  or  character, 
and  whether  they  have  or  have  not  labored  equally  for  the 

Atl.  384.  If  there  is  an  agreement  as  to  the  proportion  in  which 
profits  are  to  he  shared,  it  will  be  presumed  that  losses  are  to  be 
borne  in  the  same  ratio,  though  there  is  no  positive  rule  to  that 
effect.  Flagg  v.  Stowe,  85  111.  164;  Whitcomb  v.  Converse,  119  Mass. 
38,  42,  Burdick's  Cases,  575,  Mechem's  Cases,  492;  Moley  v.  Brine, 
120  Mass.  324;  Bates,  Partn.  §  181. 

si  Brewer  v.  Browne,  68  Ala.  210;  Griggs  v.  Clark,  23  Cal.  427; 
Ligare  v.  Peacock,  109  111.  94;  Roach  v.  Perry,  16  111.  37;  Taylor  v. 
Coffing,  18  111.  422;  Farr  v.  Johnson,  25  111.  522;  Henrickson  v. 
Reinback,  33  111.  299;  Remick  v.  Emig,  42  111.  342;  Flagg  v.  Stowe, 
85  111.  164;  Moore  v.  Bare,  11  Iowa,  198;  Lee  v.  Lashbrooke,  8  Dana 
(Ky.)  214;  Wolfe  v.  Gilmer,  7  La.  Ann.  583;  Fleischmann  v.  Gotts- 
chalk,  70  Md.  523,  17  Atl.  384;  Harris  v.  Carter,  147  Mass.  313;  Whit- 
comb v.  Converse,  119  Mass.  38,  Burdick's  Cases,  575,  Mechem's 
Cases,  492;  Northrup  v.  McGill,  27  Mich.  234;  Hutchinson  v.  Du- 
bois, 45  Mich.  143,  7  N.  W.  714;  Randle  v.  Richardson,  53  Miss.  176; 
Henry  v.  Bassett,  75  Mo.  89;  Ratzer  v.  Ratzer,  28  N.  J.  Eq.  136; 
Evans  v.  Warner,  20  App.  Div.  230,  47  N.  Y.  Supp.  16;  Ryder  v.  Gil- 
bert, 16  Hun  (N.  Y.)  163;  Van  Name  v.  Van  Name,  38  App.  Div. 
451,  56  N.  Y.  Supp.  659;  Frazer  v.  Linton,  183  Pa.  186,  38  Atl.  589; 
Peacock  v.  Peacock,  16  Ves.  49,  19  Eng.  Rul.  Cas.  549.  There  is  a 
presumption  of  law  in  favor  of  an  equality  of  interest  in  case  of 
the  property,  as  there  is  of  the  profits.  Evans  v.  Warner,  20  App. 
Div.  230,  47  N.  Y.  Supp.  16.  "When  a  partnership  relation  is  found 
to  exist,  the  presumption  is  that  the  partners  have  equal  rights  and 
duties,  and,  if  the  right  of  one  is  simply  in  profits,  that  is  to  be  es- 
tablished by  some  evidence,  or  there  are  some  facts  to  be  found 
from  which  it  may  be  logically  concluded."  Earle  v.  Art  Library 
Pub.  Co.,  95  Fed.  548.  The  mere  fact  that  the  partners  have  carried 
on  the  business  for  many  years  without  an  accounting  between  them 
is  insufficient  to  show  that  they  had  agreed  to  an  unequal  division 
of  earnings.  Van  Name  v.  Van  Name,  38  App.  Div.  451,  56  N.  Y. 
Supp.  659. 


ATTACHMENT  FOR  DEBT.  137 

benefit  of  the  firm.52  This  rule  rests  upon  the  consideration 
that  it  is  impossible  for  the  court  to  set  a  proportionate  value 
on  the  sendees  of  each  partner,  where  there  is  no  express 
agreement,  since  the  worth  of  a  particular  member  to  the 
firm  may  depend  on  many  things  besides  the  amount  of  cap- 
ital brought-  in  by  him.53 


Attachment  oe  Execution  foe  Individual  Debt  of 

Partner. 

7 7 .  The  interest  of_a  partner  in  the  firm  property  may  ha 
seized  ancLsolcj^on  attachment  or  execution  for  such 
partner's  individual  debt. 

78.  Apurchaser  at  such  sale  takes  subject  tojthe  equities  of 
the  other  partners  and  the  firm  creditors. 

It  is  universally  admitted  that  the  interest  of  a  partner  in 
the  tangible  property  of  the  firm  is  liable  to  seizure  and  sale 
upon  attachment  or  execution  in  favor  of  his  separate 
creditor.54  "But  while  the  right  to  levy  is  thus  conceded, 
the  authorities  differ  widely  as  to  the  course  to  be  pursued 
by  the  creditor  and  the  officer  executing  the  writ.  In  some 
cases  the  right  of  the  officer  to  take  goods,  even  temporarily, 
out  of  the  immediate  possession  and  control  of  the  other  part- 
ners, is  denied,  and,  in  others,  a  temporary  interruption  of 

52  Taylor  v.  Coffing,  18  111.  422;  Broadfoot  v.  Fraser,  73  Vt.  313, 
50  Atl.  1054;  Avritt  v.  Russell,  22  Ky.  L.  R.  752,  58  S.  W.  811;  Lindl. 
Partn.  p.  349. 

58  Pollock,  Partn.  art.  32. 

«  Harris  v.  Phillips,  49  Ark.  58,  4  S.  W.  196;  Johnson  v.  Connecti- 
cut Bank,  21  Conn.  148;  Hurlbut  v.  Johnson,  74  111.  64;  Aldrich  v. 
Wallace,  8  Dana  (Ky.)  287;  Choppin  v.  Wilson,  27  La.  Ann.  444; 
Lester  v.  Givens,  74  Mo.  App.  395;  Clements  v.  Jessup,  36  N.  J.  Eq. 
569;  James  v.  Burnet,  20  N.  J.  Law,  635;  Nixon  v.  Nash,  12  Ohio  St. 
649;  Hoaglin  v.  Henderson,  119  Iowa,  720,  94  N.  W.  247. 


138  PARTNERSHIP  PROPERTY. 

their  possession,  in  order  to  take  an  inventory,  is  reluctantly 
permitted  :  -till  the  decided  weight  of  authority  seems  to  be. 
thai  the  officer  may,  and,  for  his  own  security  and  that  of  the 
execution  creditor,  should,  take  possession  of  all  the  chattels 

levied  en,  ami,  after  the  sale  of  the  debtor's  interest  therein,. 
redeliver  the  same  to  the  other  partners  and  the  purchaser, 
who  are  said  to  be  tenants  in  common  of  the  chattels  so 
Bold."85 

Whatever  the  practice  in  any  particular  jurisdiction  may 
be,  it  is  well  settled  that  the  separate  creditor  or  purchaser  at 
i  le  acquires  only  the  beneficial  interest  of  the  debtor  part- 
ner, which,  as  has  been  seen,  is  merely  his  residuary  share 
after  the  partnership  accounts  are  settled,  and  the  rights  of 
the  partners   inter  se   adjusted.50     The   purchaser  acquires 

56  Per  Peck,  J.,  in  Nixon  v.  Nash,  12  Ohio  St.  649.  See,  generally, 
upon  this  subject,  Andrews  v.  Keith,  34  Ala.  722;  Wright  v.  Ward, 
65  Cal.  525,  4  Pac.  534;  Felt  v.  Cleghorn,  2  Colo.  App.  4;  Davis  v. 
White,  1  Houst.  (Del.)  228;  Anderson  v.  Chenney,  51  Ga.  372;  New- 
hall  v.  Buckingham,  14  111.  405;  Williams  v.  Lewis,  115  Ind.  45,  17 
N.  E.  262,  7  Am.  St.  Rep.  403;  Hubbard  v.  Curtis,  8  Iowa,  1,  74  Am. 
Dec.  283;  Hershfield  v.  Claflin,  25  Kan.  166,  37  Am.  Rep.  237;  White 
v.  Woodward,  8  B.  Mon.  (Ky.)  484;  Vicory  v.  Strausbaugh,  78  Ky. 
425;  Moore  v.  Pennell,  52  Me.  162,  83  Am.  Dec.  500;  Hutchinson  v. 
Dubois,  45  Mich.  143,  7  N.  W.  714;  Barrett  v.  McKenzie,  24  Minn.  20 ; 
Blumenfeld  v.  Seward  Bros.,  71  Miss.  342,  14  So.  442;  Banks  v. 
Evans,  10  Smedes  &  M.  (Miss.)  35;  Lloyd  v.  Tracy,  53  Mo.  App.  175; 
Lester  v.  Givens,  74  Mo.  App.  395;  Morrison  v.  Blodgett,  8  N.  H.  238, 
29  Am.  Dec.  653;  Atkins  v.  Saxton,  77  N.  Y.  195;  Smith  v.  Orser,  42 
N.  Y.  132;  Turner  v.  Smith,  1  Abb.  Prac.  (N.  Y.;  N.  S.)  304;  Gow 
v.  Hinton,  8  Abb.  Prac.  (N.  Y.)  122;  In  re  Smith,  16  Johns.  (N.  Y.) 
102;  Tredwell  v.  Rascoe,  3  Dev.  Law  (N.  C.)  50;  Deal  v.  Bogue,  20 
Pa.  228;  Richard  v.  Allen,  117  Pa.  199,  11  Atl.  552,  2  Am.  St.  Rep. 
652;  Saunders  v.  Bartlett,  12  Heisk.  (Tenn.)  316;  Canales  v.  Perez, 
C5  Tex.  291;  Snell  v.  Crowe,  3  Utah,  26,  5  Pac.  522;  Shaver  v.  White, 
i.  Munf,  (Va.)  110;  Skavdale  v.  Moyer,  21  Wash.  10,  56  Pac.  841; 
Heydon  v.  Heydon,  1  Salk.  392;  Waters  v.  Taylor,  2  Ves.  &  B.  299; 
West  v.  Skip,  1  Ves.  Sr.  242;  Parker  v.  Pistor,  3  Bos.  &  P.  288. 

se  Lester  v.  Givens,  74  Mo.  App.  395;  Nixon  v.  Nash,  12  Ohio  St. 
650. 


ATTACHMENT  FOR  DEBT.  139> 

merely  a  right  in  equity  to  call  for  an  account,  and  thus  en- 
title himself  to  the  interest  of  the  partner  in  the  property 
which  shall,  upon  such  settlement,  be  ascertained  to  exist.57 

.The  officer  cannot  sell  the  entire  property  in  any  parjicnla-E- 
g^ods-but  must  geizeand  sell  merely  the  debtor  partner's  in- 
Iptoqj-,  tViP-ppin  5S  Indeed,  it  seems  to  be  the  better  opinion 
that  the  levy  must  be  made  upon  the  partner's  interest  in  the 
whole  of  the  partnership  effects,  and  not  merely  upon  his  in- 
terest in  specific  articles,59  though,  in  many  instances,  only 

57  1  Story,  Eq.  Jur.  §  677;  Cox  v.  Russell,  44  Iowa,  556;  Nixon  v. 
Nash,  12  Ohio  St.  650,  651;  Clagett  v.  Kilbourne,  1  Black  (U.  S.) 
346.  If  the  sheriff,  under  a  separate  execution,  levy  upon  and  sell 
the  defendant's  interest  in  the  partnership  property,  he  cannot  de- 
liver possession  to  the  purchaser.  He  only  acquires  a  right  to  an  ac- 
count. Deal  v.  Bogue,  20  Pa.  228.  And  see  Lucas  v.  Laws,  27  Pa. 
211;   Reinheimer  v.  Hemingway,  35  Pa.  432. 

ss  White  v.  Jones,  38  111.  159;  Williams  v.  Lewis,  115  Ind.  45,  17 
N.  E.  262,  7  Am.  St.  Rep.  403;  Edgar  v.  Caldwell,  Morris  (Iowa) 
434;  Moore  v.  Pennell,  52  Me.  162,  83  Am.  Dec.  500;  Hutchinson  v. 
Dubois,  45  Mich.  143,  7  N.  W.  714;  Lester  v.  Givens,  74  Mo.  App.  395; 
Tappan  v.  Blaisdell,  5  N.  H.  190;  Morrison  v.  Blodgett,  8  N.  H.  238, 
29  Am.  Dec.  653;  Atkins  v.  Saxton,  77  N.  Y.  195;  Nixon  v.  Nash,  12 
Ohio  St.  649;  Skavdale  v.  Moyer,  21  Wash.  10,  65  Pac.  841;  Clagett 
v.  Kilbourne,  1  Black  (U.  S.)  346.  A  separate  execution  creditor 
sells,  not  the  chattels  of  the  partnership,  but  the  interest  of  the  part- 
ner, incumbered  with  joint  debts,  and  the  joint  creditors  have,  there- 
fore, no  claim  on  the  proceeds.  Doner  v.  Stauffer,  Rawle,  P.  &  W. 
(Pa.)  198,  Burdick's  Cases,  218.  And  see  Lucas  v.  Laws,  27  Pa.  211; 
Smith  v.  Emerson,  43  Pa.  456.  Where  partnership  property  is  sold 
under  separate  executions  against  the  individual  partners,  the  pro- 
ceeds represent  the  several  interests  of  the  partners,  and  not  that  of 
the  firm.  Vandike's  Appeal,  57  Pa.  9.  See  Flanagan  v.  McAffee,  1 
Phila.   (Pa.)   75. 

so  Daniel  v.  Owens,  70  Ala.  297;  Church  v.  Knox,  2  Conn.  514; 
Gerard  v.  Bates,  124  111.  150,  7  Am.  St.  Rep.  350;  Stumph  v.  Bauer, 
76  Ind.  157;  Sirrine  v.  Briggs,  31  Mich.  443;  Shaver  v.  White,  6 
Munf.  (Va.)  110;  Wayt  v.  Peck,  9  Leigh  (Va.)  434. 

A  levy  on  an  undivided  half  of  a  portion  of  partnership  property 
owned  equally  by  two  partners,  is  invalid,  where  the  judgment  is 
against  one  of  the  partners  individually.  Ernest  v.  Woodworth,  124 
Mich.  1,  82  N.  W.  661. 


140  PARTNERSHIP  PROPERTY. 

;i  part  of  the  u"<:<ls  have  been  seized,  and  the  undivided  share 
in  separate  articles  has  been  sold  to  different  individuals.00 


Garnishment. 

As  to  whether  a  partner's  interest  may  be  reached  by  gar- 
nishment of  the  firm,  the  better  opinion  would  seem  to  be  that 
it  cannot,008,  but  garnishment  has  been  allowed  under  pecu- 
liar circumstances.0015 


CONTEBSION    OF    FlR.M    REALTY    InTO   PERSONALTY. 

In  England,  partnership  realty  is  deemed  personalty 
for  all  purposes,  in  the  absence  of  an  agreement  to_the. 
contrary. 

In  the  United  States,  partnership  realty  is  deemed  per-. 
sonalty  only  so  far  as  the  exigencies  of  a  settlement  .of 
the  firm  business  may  require,  in  the  absence  of  an 
agreement  that  it  shall  be  treated  as  personalty  for  all 
purposes. 

The  English  rule,  after  many  fluctuations,  became  settled 
that  partnership  really  is  ipso  facto,  in  the  view  of  a  court 
of  equity,  converted  into  personalty  for  all  purposes,  as  well 
for  the  purpose  of  the  adjustment  of  the  partnership  debts 

eo  Felt  v.  Cleghorn,  2  Colo.  App.  4;  Hershfield  v.  Claflin,  25  Kan. 
166,  37  Am.  Rep.  237;  Morrison  v.  Blodgett,  8  N.  H.  238;  Phillips  v. 
Cook,  24  Wend.  (N.  Y.)  389;  Dutton  v.  Morrison,  17  Ves.  205;  Waters 
v.  Taylor,  2  Ves.  &  B.  301.     See  Lester  v.  Givens,  74  Mo.  App.  399. 

eoaFewell  v.  American  Surety  Co.,  80  Miss.  782,  28  So.  755,  92 
Am.  St.  Rep.  625;  Siegel,  Cooper  &  Co.  v.  Schueck,  167  111.  522,  47 
N.  E.  855. 

sob  "Where  a  creditor  of  a  partner  seeks  an  accounting  of  the 
partnership  matters,  and  the  subjection  of  the  partner's  interest  to 
the  payment  of  a  debt,  he  may  have  garnishment  to   reach  such 


CONVERSION  OF  REALTY.  141 

and  the  claims  of  the  partners  inter  se  as  for  the  purpose  of 
determining  the  succession  as  between  the  personal  represen- 
tatives of  a  deceased  partner  and  the  heirs  at  law.61  ^    This 
rule  has  since  been  expressly  declared  by  statute.62     Lindlcy, 
in  his  work  on  Partnership,  bases  the  rule  on  the  nature  of 
the  interest  of  each  partner  in  the  partnership  property.     He 
says:     "From  the  principle  that  a  share  of  a  partner  is 
nothing  more  than  his  proportion  of  "the  partnership  assets 
after  they  have  been  turned  into  money  and  applied  in  liquid- 
ation of  the  partnership  debts,  it  necessarily  follows  that,  in 
equity,  a  share  in  a  partnership,  whether  its  property  consists 
in  lands  or  not,  must,  as  between  the  real  and  personal  repre- 
sentatives of  a  deceased  partner,  be  deemed  to  be  personal 
and  not  real  estate,  unless,  indeed,  such  conversion  is  inconsis- 
tent with  the  agreement  between  the  parties."6       It  is  con- 
debtor's  individual   interest  in   a   debt  alleged  to  be   owing  to  tbe 
firm."    O.  S.  Kelly  Co.  v.  Zarecor  (Tenn.  Ch.  App.)  62  S.  W.  189. 

ciCrawshay  v.  Maule,  1  Swanst.  495;  Darby  v  Darby,  3  Drewry, 
495,  Ames'  Cas.  177;  Essex  v.  Essex,  20  Beav.  442;  Thornton  v.  Dixon, 
3  Brown  Ch.  199,  Ames'  Cas.  175;  Selkrig  v.  Davies,  2  Dow,  230; 
Darrow  v.  Calkins,  154  N.  Y.  503,  49  N.  E.  61. 

•-English  Partnership  Act  1890  (53  &  54  Vict.  c.  39)  §§  20,  22. 
See,  also,  Enc.  Laws  Eng.  tit.  "Partnership." 

G3Lindl.  Partn.  p.  687.  The  English  doctrine  is  also  said  to  have 
grown  out  of  the  peculiar  law  of  inheritance  in  England,  being  in- 
tended to  remedy  the  hardship  of  the  rule  which  excludes  all 
but  the  eldest  child  from  the  inheritance,  and  of  the  other  rule 
which  exempts  real  estate  in  the  hands  of  the  heir  from  all  but  the 
specialty  debts  of  the  ancestor.  See  Fairchild  v.  Fairchild,  64  N.  Y. 
471;  Darrow  v.  Calkins,  154  N.  Y.  503,  49  N.  E.  61;  Shearer  v. 
Shearer,  98  Mass.  114.  Prof.  Burdick  deems  the  suggestion  "purely 
fanciful."  Burdick,  Partn.  p.  87.  See,  also,  Cookson  v.  Cookson,  8 
Sim.  529,  cited  in  Shearer  v.  Shearer,  98  Mass.  107,  Ames'  Cas.  185. 
In  the  case  of  Pierce's  Adm'r  v.  Trigg's  Heirs,  10  Leigh  (Va.)  406, 
Judge  Tucker  says:  "It  has  been  a  vexed  question  in  England, 
whether  the  interest  of  the  deceased  partner  in  the  real  estate,  and 
the  proceeds  of  the  sale  of  that  interest,  belong  to  the  personal  rep- 
resentatives or  to  the  heir.  The  better  opinion  gives  the  fund  to 
the  former,  since,  upon  familiar  principles,  as  the  land  was   pur- 


142  PARTNERSHIP  PROPERTY. 

ceded  that  the  intention  of  the  parties  will  prevent  an  "out 
and  out"  conversion,  where  that  intention  is  manifested. 

The  general  doctrine  of  "out  and  out"  conversion  adopted 
by  t lie  English  courts  has  not  been  followed  to  its  full  extent 
in  the  United  States,  and  there  seems  to  be  no  sufficient  rea- 
son why  it  should  be.64  "The  clear  current  of  the  American 
decisions  supports  the  rule1  that,  in  the  absence  of  any  agree- 
ment, express  or  implied,  between  the  partners  to  the  contrary 
partnership  real  estate  retains  its  character  as  realty,  with  all 
the  incidents  of  that  species  of  property,  between  the  partners 
themselves,  and  also  between  a  surviving  partner  and  the 
real  and  personal  representatives  of  a  deceased  partner,  ex- 
cept that  each  share  is  impressed  with  a  trust  implied  by  law 
in  favor  of  the  other  partner,  that,  so  far  as  is  necessary,  it 
shall  be  first  applied  to  the  adjustment  of  partnership  obli- 
gations,  and  the  payment  of  any  balance  found  to  be  due 
from  the  one  partner  to  the  other  on  winding  up  the  partner- 
ship affairs.  To  the  extent  necessary  for  these  purposes,  the 
character  of  the  property  is  in  equity  deemed  to  be  changed 

chased  with  the  personalty,  and  was  brought  into  the  firm  as  stock, 
it  ought,  as  between  the  executor  and  the  heir,  to  replace  the  fund 
withdrawn  from  the  personal  estate.  By  placing  it  as  stock  in  the 
partnership  fund,  the  deceased  evidenced  a  design  to  treat  it  as  per- 
sonalty, and  it  ought  to  go  accordingly.  The  representatives  of  the 
deceased  can  claim  it  only  as  stock,  and  as  stock  in  trade  it  is,  ex  vi 
termini,  personal." 

64  "There  is  no  policy  growing  out  of  our  laws  of  inheritance  or 
the  exemption  of  lands  from  liability  for  simple  contract  debts, 
which  requires  the  application  of  such  doctrine  here.  The  lands 
of  the  ancestor  are  assets  for  the  payment  of  all  debts,  and  the  per- 
sons who  take  by  descent  and  under  the  statute  of  distribution  are 
substantially  the  same.  The  necessity  for  an  absolute  conversion, 
supposed  to  be  found  in  the  nature  of  the  partnership  interest,  seems 
hardly  sufficient  to  justify  a  fiction  which  should  deprive  real  estate 
of  a  partnership  of  its  descendible  quality,  when  it  is  admitted  on 
all  hands  that  partnership  real  estate,  if  the  necessity  arises,  is 
first  subject  to  be  appropriated  in  equity  to  the  discharge  of  part- 
nership obligations,  and  the  adjustment  of  the  equities  between  the 
parties."     Darrow  v.  Calkins,  154  N.  Y.  503,  49  N.  E.  61. 


CONVERSION  OF  REALTY.  143 

into  personalty.  On  the  death  of  either  partner,  where  the 
title  is  vested  in  both,  the  share  of  the  land  standing  in  the 
name  of  the  deceased  partner  descends  as  real  estate  to  his 
heirs,  subject  to  the  equity  of  the  surviving  partner  to  have 
it  appropriated  to  accomplish  the  trust  to  which  it  was  pri- 
marily subjected.  The  working  out  of  the  mutual  rights 
which  grew  out  of  the  partnership  relation  does  not  seem  to 
require  that  the  character  of  the  property  should  .be  changed 
until  the  occasion  arises  for  a  conversion,  and  then  only  to 
the  extent  required.  The  American  rule  commends  itself 
for  its  simplicity.  It  makes  the  legal  title  subservient  in 
equity  to  the  original  trust.  It  disturbs  it  no  further  than  is 
necessary  for  this  purpose.  The  portion  of  the  land  not  re- 
quired for  partnership  equities  retains  its  character  as  realty, 
and  it  leaves  the  laws  of  inheritance  and  descent  to  their  or- 
dinary operation."65     If,  as  sometimes  happens,  the  title  to 

05  Darrow  v.  Calkins,  154  N.  Y.  503,  49  N.  E.  61.  See,  also,  Col- 
lumb  v.  Read,  24  N.  Y.  505;  Fairchild  v.  Fairchild,  64  N.  Y.  471; 
Buchan  v.  Sumner,  2  Barb.  Ch.  (N.  Y.  )  165;  Shearer  v.  Shearer,  98 
Mass.  114;  Shanks  v.  Klein,  104  U.  S.  18,  Mechem's  Cases,  164;  Gray 
v.  Palmer,  9  Cal.  637;  Strong  v.  Lord,  107  111.  25;  Robinson  Bank  v. 
Miller,  153  111.  244,  38  N.  E.  1078,  Burdick's  Cases,  165,  Mechem's 
Cases,  155;  Pepper  v.  Pepper,  24  111.  App.  316;  Galbraith  v.  Tracy, 
153  111.  54,  38  N.  E.  937;  Matlock  v.  Matlock,  5  Ind.  403;  Paige  v. 
Paige,  71  Iowa,  318,  32  N.  W.  360,  Mechem's  Cases,  170;  Galbraith 
v.  Gedge,  16  B.  Mon.  (Ky.)  631;  Goodburn  v.  Stevens,  5  Gill.  (Md.) 
1;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562;  Harris  v.  Harris,  153  Mass. 
439,  26  N.  E.  1117;  Moran  v.  Palmer.  13  Mich.  367;  Godfrey  v.  White, 
43  Mich.  171,  5  N.  W.  243;  Woodward-Holmes  Co.  v.  Nudd,  58  Minn. 
236,  59  N.  W.  1010,  Burdick's  Cases,  179;  Willet  v.  Brown,  65  Mo. 
138;  Buckley  v.  Buckley,  11  Barb.  (N.  Y.)  43;  Williams  v.  Gillies, 
75  N.  Y.  197,  Burdick's  Cases,  290;  Ludlow's  Heirs  v.  Cooper's 
Devisees,  4  Ohio  St.  9;  West  Hickory  Min.  Ass'n  v.  Reed,  80  Pa.  38; 
Moderwell  v.  Mullison,  21  Pa.  257;  Foster's  Appeal,  74  Pa.  391;  Ap- 
peal of  Haeberly,  191  Pa.  239,  43  Atl.  207;  Pierce  v.  Covert,  39  Wis. 
252;  Martin  v.  Morris,  62  Wis.  418,  22  N.  W.  525;  Riddle  v.  White- 
hill,  135  U.  S.  621;  In  re  Codding,  9  Fed.  849. 

"In  this  view  of  the  grounds  and  purpose  of  such  equitable  con- 
version, even  regarding  all  partnership  real  estate,  however  the  legal 


144  PARTNERSHIP  PROPERTY. 

partnership  real  estate  is  in  the  name  of  one  of  the  partners 
only,  "ii  the  death  of  the  other  partner,  his  equitable  title 
descends  to  his  heirs,  or  goes  to  his  devisees,  but  subject  to 
the  primary  claims  growing  cut  of  the  partnership  relation.60 

title  may  be  held,  as  held  in  trust  for  the  partnership,  this  court  is 
disposed  to  hold,  notwithstanding  the  great  weight  of  authority  to 
the  contrary  elsewhere,  that  such  real  estate  is  to  be  converted  into 
personalty  only  when  such  conversion  is  required  for  the  payment 
of  claims  against  the  partnership  which  are  in  the  nature  of  debt. 
Balances  due  to  individual  partners  for  advances  to  the  firm,  or  for 
payments  made  in  its  behalf,  come  within  this  definition.  So,  also, 
may  capital  furnished  by  one  partner,  when,  by  the  terms  upon 
which  it  was  furnished,  or  from  the  nature  and  necessity  of  the  case, 
it  is  to  be  repaid  in  specific  amounts,  in  order  to  reach  the  net  result, 
or  body  of  the  partnership  interests,  to  which  the  proportional  rights 
or  shares  of  the  several  partners  attach.  In  short,  whatever  is  re- 
quired to  be  paid  or  measured  in  precise  sums  must  be  so  adjusted; 
and  real  estate,  converted  for  that  purpose,  undoubtedly  becomes 
personalty,  and  is  to  be  distributed  as  such  when  paid  over  to  the 
party  entitled.  But  the  shares  in  the  body  of  the  partnership  prop- 
erty— those  interests  which  are  not  measured  by  precise  amount,  but 
consist  in  a  common  proprietorship  after  all  special  claims  are  sat- 
isfied— stand  upon  different  footing.  These  interests  are  determined 
by  the  proportions  fixed  by  the  articles  or  organic  law  of  the  part- 
nership. When  the  beneficial  interests  and  the  legal  title  correspond, 
it  has  already  been  decided  that  the  rights  of  the  partners  in  real 
estate  so  held  will  be  left  to  adjust  themselves  by  the  descent  of  the 
legal  title,  with  its  incidents,  as  real  estate  of  the  several  partners 
held  in  common.  Wilcox  v.  Wilcox,  13  Allen  (Mass.)  252.  When 
the  legal  title  is  otherwise  held,  it  is  held  in  trust,  and  the  equitable 
title  descends  in  like  manner,  and  with  like  incidents,  except  as  to 
dower.  The  office  of  equity  in  such  case  is  merely  to  declare  the 
trusts,  and  compel  the  legal  title  to  serve  the  equitable  interests. 
This  is  accomplished  by  directing  such  conveyances  as  will  make  the 
legal  title  of  the  several  parties  conform  to  their  respective  bene- 
ficial interests."     Shearer  v.  Shearer,  98  Mass.  107,  Ames'  Cas.  185. 

'  Alter  the  debts  of  a  partnership  have  been  paid,  the  land  belong- 
ing to  the  partnership  is  considered  realty,  and  not  personalty,  for 
purposes  of  distribution  on  dissolution,  so  that  the  heirs  of  a  de- 
ceased partner  are  entitled  to  partition."  Comstock  v.  McDonald, 
126  Mich.  142,  85  N.  W.  579. 

oe  Darrow  v.  Calkins,  154  N.  Y.  503,  49  N.  E.  61,  citing  Fairchild 
v.  Fairchild,  64  N.  Y.  471. 


CONVERSION  OF  REALTY.  145 

It  has  already  been  seen  that,  upon  the  death  of  the  partner' 
holding  the  legal  title,  the  equitable  title  of  the  firm  passes- 
to  the  survivors,  while  the  legal  title  descends  to  the  heirs, 
but  in  trust,  to  apply  it  so  far  as  necessary  to  partnership 
purposes.67  The  widow  of  a  deceased  partner  is  entitled  to 
dower  in  the  partnership  lands  which  remain  after  the  claims 
of  the  creditors  and  other  partners  have  been  satisfied.68 

It  is  generally  conceded  in  all  jurisdictions  that  the  ques- 
tion whether  partnership  real  estate  shall  be  deemed  abso- 
lutely converted  into  personalty  for  all  purposes,  or  only  con- 
verted pro  tanto  for  the  purpose  of  partnership  equities,  may 
be  controlled  by  the  express  or  implied  agreement,  of  the  part- 
ners themselves,  and  that  where,  by  such  agreement,  it  ap- 
pears that  it  was  the  intention  of  the  partners  that  the  lands 
should  be  treated  and  administered  as  personalty  for  all  pur- 
poses, effect  will  be  given  thereto.69 

07  See  supra,  §§  69-71. 

c8  Brewer  v.  Browne,  68  Ala.  210;  Lenow  v.  Fones,  48  Ark.  557; 
Bopp  v.  Fox,  63  111.  540;  Strong  v.  Lord,  107  111.  25;  Galbraith  v. 
Gedge,  16  B.  Mon.  (Ky.)  631;  Hill  v.  Cornwall  &  Bro.'s  Assignee,  95 
Ky.  512,  26  S.  W.  540,  Burdick's  Cases,  474;  Goodburn  v.  Stevens,  5 
Gill  (Md.)  1;  Dyer  v.  Clark,  5  Mete.  (Mass.)  562;  Woodward-Holmes 
Co.  v.  Nudd,  58  Minn.  236,  59  N.  W.  1010,  Burdick's  Cases,  179;  War- 
fel  v.  Calder,  8  Lane.  Bar.  (Pa.)  205.  The  widow  and  heirs  have 
only  an  interest  in  the  net  discharged  property  after  all  the  partner- 
ship debts  are  discharged.  Gray  v.  Palmer,  9  Cal.  640.  The  widow 
of  a  deceased  partner  has  no  dower  in  lands  conveyed  during  the 
continuance  of  the  partnership,  although  she  did  not  join  in  the 
deed.  Woodward-Holmes  Co.  v.  Nudd,  58  Minn.  236,  Burdick's  Cases, 
179.  But  compare  Fairchild  v.  Fairchild,  64  N.  Y.  471;  Pugh's  Heirs 
v.  Currie,  5  Ala.  446. 

oo  Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  (Mass.)  462;  Dar- 
row  v.  Calkins,  154  N.  Y.  503,  49  N.  B.  61;  Maddock  v.  Astbury,  32 
N.  J.  Eq.  181;  Ludlow's  Heirs  v.  Cooper's  Devisees,  4  Ohio  St.  9; 
Leaf's  Appeal,  105  Pa.  505.  "In  respect  to  real  estate  purchased  for 
partnership  purposes  with  partnership  funds,  and  used  in  the  part- 
nership business,  the  English  rule  of  'out  and  out'  conversion  may 
be  regarded  as  properly  applied  on  the  ground  of  intention,  even  in 

10 


14G  PARTNERSHIP  PROPERTY. 

Changing  Joint  Into  Separate  Property,  and 
Vice  Versa. 

81.  In  the  absence  of  fraud,  the  partners  may  by  mutuaj 
agreement,  convert  firm  property  into  separate  prop- 
erty, or  separate  property  into  firm  property.") 


This  rule  follows  logically  from  the  rule  already  con- 
sidered, that  the  agreement  and  intention  of  the  parties  deter- 
mines what  is  partnership  property,  and  what  is  not.  But 
as  an  agreement  changing  the  character  of  property  from 
joint  to  separate  or  vice  versa  is,  is  effect,  a  conveyance  of 
such  property,  it  is  subject  to  the  rules  of  law  with  respect 
to  fraudulent  conveyances.  It  is  more  convenient  to  con- 
sider these  rules  in  connection  with  the  rights  and  liabilities 
of  partners  as  third  persons.  It  is  accordingly  reserved  for 
a  later  chapter.70 

jurisdictions  which  have  not  adopted  that  rule  as  applied  to  partner- 
ship real  estate  acquired  under  different  circumstances,  and  where 
no  specific  intention  appeared."  Darrow  v.  Calkins,  154  N.  Y.  503, 
49  N.  E.  61.  See,  also,  Collumb  v.  Read,  24  N.  Y.  505.  Where  land 
is  purchased  by  several  persons,  not  for  permanent  use,  but  for  pur- 
poses of  sale  for  profit,  it  may  be  regarded  in  equity  as  personal 
property  among  the  partners  in  the  speculation.  Nicoll  v.  Ogden, 
29  111.  323.  Followed  by  Mauck  v.  Mauck,  54  111.  281;  Faulds  v.  Yates, 
57  111.  416;  Morrill  v.  Colehour,  82  111.  618.  Compare  Smith  v.  Ram- 
sey, 1  Gilm.  (111.)  373.  See,  also,  Jones  v.  Davies,  60  Kan.  309,  56 
Pac.  484.  A  stipulation  in  the  partnership  articles  that  "all  the  real 
estate  whatever  belonging  to  the  said  firm  shall  be,  and  is  hereby, 
considered  as  part  of  the  joint  stock  and  funds  of  said  firm,  and  as 
possessing  all  the  incidents  and  liabilities  of  partnership  funds  and 
personal  property,  and  is  hereby  by  the  parties  fully  impressed  with 
such  incidents  and  liabilities,"  works  a  total  conversion  of  the  realty 
into  personalty.  Davis  v.  Smith,  82  Ala.  198,  2  So.  897,  Burdick's 
Cases,  182.  For  the  peculiar  doctrine  that  prevails  in  Kentucky, 
see  Pars.  Partn.  (4th  Ed.)  §  272,  note  1.  See,  also,  Ludlow's  Heirs 
v.  Cooper's  Devisees,  4  Ohio  St.  9,  wherein  an  agreement  set  out  was 
held  to  work  a  conversion  'out  and  out." 
to  See  post,  c.  9. 


3 


CHAPTER  VIII. 


RIGHTS  AND  LIABILITIES  OF  PARTNERS   INTER   SE. 

82.  Articles  of  Partnership. 

83.  Construction  of  Articles. 

84.  Right  to  Participate  in  Management. 

85.  Duty  to  Observe  Good  Faith. 

86.  Obtaining  Private  Benefits. 

87-88.  Right  to  Carry  on  Separate  Business. 

89.  Right  to  Contribution  and  Indemnity. 

90.  Right  to  Compensation. 
91-92.  Right  to  Interest  on  Balances. 

93.  Partnership  Accounts. 

94.  Duty  to  Conform  to  Partnership  Articles. 

95.  Duty  to  Exercise  Care  and  Skill. 
96-98.  Power  of  Majority. 

99-100.     Division  of  Profits. 
101.     Expulsion  of  Partner. 
101-103.     Partner's  Lien. 

Articles  of  Partnership. 

82.     The  formal  written  agreement  definingthe  respective 

rights  and  liabilities  of  the  partners  is  known  as  the 
"Articles  of  Partr 


"When  persons  deliberately  enter  into  partnership  with 
each  other,  it  is  usual  for  them  to  enter  into  a  formal  written 
contract  defining  their  respective  rights,  duties,,  and  bmhjl- 
jiioflr  This  formal  agreement  is  called  the  "Articles  of  Part- 
nership." It  is  always  desirable  to  have  formal  articles,  in 
order  that  the  partners  may  know  definitely  what  their  rights, 
duties,  and  liabilities  are,  and  to  remove  any  opportunity  for 


14S  RIGHTS  OF  PARTNERS. 

controversy  in  thai  respecl  ;  bul  unless  the  partners  wish  their 
rights  and  liabilities  to  be  different  from  whal  the  law  will 
imply  in  the  absence  of  special  contract  on  the  subject,  formal 
articles  are  uol  necessary,  ami  the  law  will  fix  their  respective 
rights  and  liabilities.  Some  of  the  principal  rights,  duties 
and  liabilities  of  partners  are  considered  in  the  succeeding  sec- 
t  ions  of  this  chapter. 

('sua!  Provisions  in  Articles. 

h  is  generally  possible,  by  express  agreement,  for  part- 
ners to  make  their  respective  rights  and  liabilities  whatever 
they  see  fit.1 

It  is  usual  to  insert  in  formal  articles  provisions  declaring 
the  agreement  of  the  partners  with  respect  to  some  or  all  of 
the  following  subjects,  viz. :  The  general  nature  of  the  busi- 
ness; the  commencement  and  duration  of  the  relation;  the 
name  or  style  of  the  firm;  the  capital,  advances,  and  shares 
of  the  respective  partners;  the  conduct  and  powers  of  the  part- 
ners; the  firm  property;  the  distribution  of  profits;  accounts; 
transfer  of  shares;  the  dissolution  and  winding  up  of  the 
firm.  Any  other  special  agreement  upon  any  subject  con- 
nected  with  the  partnership  may  be  inserted.  In  this  con- 
nection it  has  been  well  said  that  partnership  articles  are  in- 
tended for  the  guidance  of  persons  who  are  not  lawyers,  and 
that  therefore  it  is  not  wise  to  insert  only  such  provisions  as 
are  necessary  to  exclude  the  application  of  rules  of  law  which 
apply  where  nothing  is  said  to  the  contrary.  "The  articles 
should  be  so  drawn  as  to  be  a  code  of  directions,  to  which  the 
partners  may  refer  as  a  guide  in  all  their  transactions,  and 

i  Crawshay  v.  Collins,  15  Ves.  226;  Townsend  v.  Goewey,  19  Wend. 
(N.  Y.)  424;  Hall  v.  Sannoner,  44  Ark.  34;  Mann  v.  Butler,  2  Barb. 
Ch.  (N.  Y.)  362.  "The  duties  and  obligations  arising  from  the  re- 
lation between  the  parties  are  regulated  by  the  express  contract  be- 
tween them  so  far  as  the  express  contract  extends  and  continues  in 
force."     Smith  v.  Jeyes,  4  Beav.  505. 


ARTICLES  OF  PARTNERSHIP.  149 

upon  which  they  may  settle  among  themselves  differences 
which  may  arise,  without  having  recourse  to  courts  of  jus- 
tice."2 

Same — Construction-  of  Articles. 

83.     The  true  meaning  of  the  articles  of  partnership  is  de- 

termined  by  the  ordinary  rules  governing  the  construc- 
tion of  contracts. 

While  the  ordinary  rules  for  the  construction  of  contracts 
apply  to  partnership  articles,3  several  rules  with  respect  to 
the  construction  of  partnership  articles  have  taken  a  more 
definite  shape. 

In  the  first  place,  partnership  articles  are  not  intended  to 
define,  and  are  not  construed  as  defining,  all  the  rights  and 
obligations  of  the  partners  inter  se.  A  good  deal  is  left  to 
be  understood.4  "The  transactions  of  partners  with  each 
other  cannot  be  considered  merely  with  reference  to  the  ex- 
press contract  between  them.  The  duties  and  obligations 
arising  from  the  relation  between  the  parties  are  regulated  by 
the  express  contract  between  them  so  far  as  the  express  con- 
tract extends  and  continues  in  force ;  but  if  the  express  con- 
tract, or  so  much  of  it  as  continues  in  force,  does  not  reach  to 
all  those  duties  and  obligations,  they  are  implied  and  en- 
forced by  law."5 

sLindl.  Partn.  pp.  411,  412. 

3  Bird  v.  Hamilton,  Walk.  Ch.  (Mich.)  361.  Where  the  language 
used  leaves  the  matter  in  doubt,  a  practical  construction  put  upon 
it  by  the  partners  themselves  by  a  course  of  conduct  for  a  consid- 
erable period  will  be  conclusive.  Winchester  v.  Glazier,  152  Mass. 
316,  25  N.  E.  728;  Snyder  v.  Seaman,  2  App.  Div.  258,  37  N.  Y.  Supp. 
696.  All  prior  negotiations,  proposals,  guaranties,  etc.,  are  merged 
in  the  partnership  articles.    Evans  v.  Hanson,  42  111.  234. 

*Lindl.  Partn.  p.  406. 

b  Smith  v.  Jeyes,  4  Beav.  505.  See,  also,  Blisset  v.  Daniel,  10  Hare, 
522;  Crawshay  v.  Collins,  15  Ves.  226. 


150  RIGHTS  OF  PARTNERS. 

Another  rule  of  construction  is  that  partnership  articles 
must  be  construed  with  reference  to  the  objects  of  the  part- 
nership. All  the  provisions  of  the  articles  are  to  be  construed 
so  as  to  advance,  and  not  to  defeat,  those  objects.  However 
general  the  language  used  may  be,  it  will  be  restricted  to  this 
end.6  This  rule  is  of  special  importance  in  considering  the 
limits  of  general  powers  conferred  upon  some  of  the  partners, 
or  upon  a  majority.7 

Any  provision,  however  worded,  will  if  possible,  be  con- 
strued so  as  to  defeat  any  attempl  by  one  partner  to  avail  him- 
self of  it  for  the  purpose  of  defrauding  his  copartner,  or  of 
taking  and  unfair  advantage.8 

Any_  provision  in  the  articles,  hojgfi%ex_express,  may  be 
varied  or  waived  and  abandoned  by  the  consent  oFall  the  part" 
ners,  and  this  consent  may  be  evidenced  not  only  by  express 
words,  but  by  their  conduct.9 

cLindl.  Partn.  p.  407.  See,  also,  Chappie  v.  Cadell,  Jac.  537.  A 
partner  may  insist  upon  a  sale  and  distribution  of  the  partnership 
property  at  the  time  fixed  by  the  partnership  articles,  though  it  is 
not  for  the  interest  of  the  firm.  Mann  v.  Butler,  2  Barb.  Ch.  (N.  Y.) 
362. 

7  See  infra,  §  96,  "Powers  of  Majority." 

sPettyt  v.  Janeson,  6  Madd.  146;  Blisset  v.  Daniel,  10  Hare,  493. 
See,  also,  infra,  §  96,  "Powers  of  Majority." 

o  Const  v.  Harris,  Turn.  &  R.  496;  Gage  v.  Parmelee,  87  111.  329; 
Gregg  v.  Hord,  129  111.  613,  22  N.  E.  528;  Thomas  v.  Lines,  83  N.  C. 
191;  Geddes  v.  Wallace,  2  Bligh,  270;  Henry  v.  Jackson,  37  Vt.  431. 
"With  respect  to  a  partnership  agreement,  it  is  to  be  observed  that, 
all  parties  being  competent  to  act  as  they  please,  they  may  put  an 
end  to  or  vary  it  at  any  moment.  A  partnership  agreement  is  there- 
fore open  to  variation  from  day  to  day,  and  the  terms  of  such  varia- 
tion may  not  only  be  evidenced  by  writing,  but  also  by  the  conduct 
of  the  parties  in  relation  to  the  agreement  and  to  their  mode  of  con- 
ducting their  business."  England  v.  Curling,  8  Beav.  133,  19  Eng. 
Rul.  Cas.  601.  A  written  agreement  as  to  dividing  profits  may  be 
extended  tacitly  by  the  mutual  understanding  of  the  parties,  or  by 
their  conduct  in  relation  to  it.  Robbins  v.  Laswell,  27  111.  365.  A 
waiver  or  modification  of  an  express  provision  may  be  inferred  from 


TO  PARTICIPATE  IN  MANAGEMENT.  151 

If  a  partnership  originally  entered  into  for  a  definite  term 
is  continued  after  the  expiration  of  that  term,  without  any 
new  agreement,  the  articles  under  which  the  partnership  was 
first  carried  on  continue,  so  far  as  they  are  applicable,  to  reg- 
ulate the  rights  and  liabilities  of  the  partners,10  but  the  part- 
nership will  be  a  partnership  at  will.11      sy 

Right  to  Participate  ix  Management. 

84.     Each  member  of  a  partnership  is  entitled  prima  facie 
to  take  part  in  its  management. 

In  the  absence  of  an  express  agreement  to  the  contrary,  the 
powers  of  the  members  of  a  partnership  are  equal,  even 
though  their  shares  may  be  unequal,  and  there  is  no  right  on 
the  part  of  one  or  more  to  exclude  another  from  an  equal  man- 
agement in  the  concern.12 

a  long  course  of  dealing  inconsistent  with  such  provision.  McCall 
v.  Moss,  112  111.  493.  Where  by  the  partnership  agreement  a  partner 
is  to  have  a  commission  on  sales  made  by  him,  his  right  thereto  is 
not  affected  by  the  fact  that  he  makes  no  claim  therefor  during  the 
continuance  of  the  partnership.    Askew  v.  Springer,  111  111.  662. 

10  Sangston  v.  Hack,  52  Md.  173;  Boardman  v.  Close,  44  Iowa,  428; 
Metcalfe  v.  Bradshaw,  145  111.  124,  33  N.  E.  1116;  Mifflin  v.  Smith,  17 
Serg.  &  R.  (Pa.)  165;  King-v.  Chuck,  17  Beav.  325;  Essex  v.  Essex, 
20  Beav.  442.  Compare  Wilson  v.  Simpson,  89  N.  Y.  619.  Where  a 
new  partner  is  admitted,  and  there  is  no  express  continuance  of  the 
original  articles,  it  has  been  held  that  provisions  of  the  original 
articles  are  annulled.  Givens  v.  Berry,  21  Ky.  L.  R.  680,  52  S.  W. 
942. 

"  Lindl.  Partn.  p.  410. 

i2Lindl.  Partn.  p.  301.  "In  partnerships,  the  good  faith  of  the 
partners  is  pledged  mutually  to  each  other  that  the  business  shall 
be  conducted  with  their  actual  personal  interposition,  so  that  each 
may  see  that  the  other  is  carrying  it  on  for  their  mutual  advantage." 
Per  Lord  Eldon  in  Peacock  v.  Peacock,  16  Ves.  51.  See,  also,  Katz 
v.  Brewington,  71  Md.  79,  20  Atl.  139. 


152  RIGHTS  OF  PARTNERS. 

It  is  of  course  competent  for  partners  to  agree  that  one  or 
more  of  them  Bhall  take  no  active  pari  in  the  management  of 
the  partnership  affairs,  and  where  they  do  so  agree,  such  part- 
ners have  no  right  to  transaol  partnership  business,  or  to 
bind  the  firm.  Nevertheless,  the  powers  of  partners  being 
presumptively  equal,  a  third  person  dealing  with  a  partner 
Vt  ithout  notice  of  any  limitation  upon  his  authority  may  hold 
the  firm  liable  to  him,  just  as  though  the  authority  had  been 
rightfully  exercised,13  but  of  course  such  partner  will  be 
liable  to  his  copartners  for  any  loss  resulting  to  them  from 
his  unauthorized  act. 


Duty  to  Observe  Good  Faith. 

85.     Partners  must  observe  the  utmost  good  faith  towards 
each  other  in  all  their  transactions. 

The  utmost  good  faith  is  due  from  every  member  of  a  part- 
nership toward-  every  other  member.14  This  obligation  to 
perfect  fairness  and  good  faith  is  not  confined  to  persons  who 

is  See  post,  c.  9,  "Rights  and  Liabilities  of  Partners  as  to  Third 
Persons." 

11  Piatt  v.  Piatt,  2  Thomp.  &  C.  39;  Lockwood  v.  Beckwith,  6  Mich. 
168;  Coursin's  Appeal,  79  Pa.  220;  Lay  v.  Emery,  8  N.  D.  404,  79  N. 
W.  1053.  In  Roby  v.  Colehour,  135  111.  300,  338,  25  N.  E.  777,  the 
court  said:  "In  cases  of  partnerships,  which  usually  involve  also 
the  relations  of  joint  ownership,  trust,  and  agency,  the  utmost  good 
faith  is  due  from  every  member  of  the  partnership  toward  every 
other  member;  and  if  any  dispute  arises  between  partners  touching 
any  transaction  by  which  one  seeks  to  benefit  himself  at  the  expense 
of  the  firm,  he  will  be  required  to  show  not  only  that  he  has  the  law 
on  his  side,  but  that  his  conduct  will  bear  to  be  tried  by  the  highest 
standard  of  honor."  "Partners,  in  all  the  scope  of  the  partnership 
business,  in  all  dealings  with  each  other  as  to  partnership  affairs  or 
property,  stand  in  a  fiduciary  relation,  the  one  to  the  other,  and  are 
bound  to  the  uberrima  fides  of  such  relation.    The  essential  idea  was 


AS  TO  GOOD  FAITH.  153 

actually  are  partners.  It  extends  to  persons  negotiating  for 
a  partnership,  but  between  whom  no  partnership  as  yet  ex- 
ists,15 and  also  to  persons  who  have  dissolved  partnership,  but 
who  have  not  completely  wound  up  and  settled  the  partner- 
ship affairs.16  The  sale  of  a  partnership  interest  by  one  part- 
ner to  another  will  be  sustained  only  when  made  for  a  fair 
consideration,  and  upon  a  full  disclosure  of  all  information 
as  to  the  value  of  the  property.17  This  requirement  of  good 
faith  has  been  said  to  be  the  basis  of  the  law  of  partnership 
so  far  as  it  relates  to  the  rights  and  obligations  of  the  partners 
between  themselves.18 

well  expressed  by  Stone,  C.  J.,  in  Goldsmith  v.  Eichold,  94  Ala.  116, 
10  So.  80.  'Each  partner  is,  in  one  sense,  a  trustee — a  trustee  for 
the  newly-created  entity,  the  partnership,  and  for  each  member 
of  the  firm,  who  thus  becomes  a  beneficiary  under  the  trust.  He 
is  more — he  is  a  trustee  and  a  cestui  que  trust.  A  trustee,  so  far 
as  his  own  duties  bind  him;  a  cestui  que  trust,  so  far  as  his  duties 
rest  on  his  copartners.  And  it  is  sometimes  said  that  each  partner 
is  both  principal  and  agent — a  principal  to  the  extent  he  represents 
his  own  interest,  but  an  agent  so  far  as  he  represents  his  copart- 
ners.' "    Bestor  v.  Barker,  106  Ala.  240,  17  So.  389. 

is  Bloom  v.  Lofgren,  64  Minn.  1,  65  N.  W.  960,  Burdick's  Cases, 
501;  Hichens  v.  Congreve,  1  Rus.  &  M.  150;  Harlow  v.  La  Brum,  151 
N.  Y.  278,  45  N.  E.  859,  Burdick's  Cases,  502;  Esmond  v.  Seeley,  28 
App.  Div.  292,  51  N.  Y.  Supp.  36;  Densmore  Oil  Co.  v.  Densmore,  64 
Pa.  43.  But  see  Uhler  v.  Semple,  20  N.  J.  Eq.  288,  holding  that  the 
rule  of  caveat  emptor  applies  to  persons  bargaining  with  each  other 
for  a  partnership. 

icLindl.  Partn.  p.  569;  Renfrow  v.  Pearce,  68  111.  125;  Pierce  v. 
McClelland,  93  111.  245;  Wells  v.  McGeoch,  71  Wis.  196,  35  N.  W.  769. 

17  Warren  v.  Schainwald.  62  Cal.  56;  Meyers  v.  Merillion,  118  Cal. 
352,  50  Pac.  662;  Baker  v.  Cummings,  4  App.  Cas.  (D.  C.)  230;  Pom- 
eroy  v.  Benton,  57  Mo.  531;  Wright  v.  Duke,  91  Hun,  409,  36  N.  Y. 
Supp.  853;  Sexton  v.  Sexton,  9  Grat.  (Va.)  204. 

isLindl.  Partn.  p.  304. 


15 i  RIGHTS  OF  PARTNERS. 


Same — Obtaining  Private  Benefits. 

86.  A  partner  will  not  be  permitted  to  obtain  for  himself 
profits  or  benefits  arising  from  a  transaction  concerning 
firm  interests. 

"It  is  clear  that  every  partner  musl  account  to  the  firm  for 
every  benefit  derived  by  him,  without  the  consent  of  his  co- 
partners, from  any  transaction  concerning  the  partnership, 
or  from  any  use  by  him  of  the  partnership  property,  name, 
or  business  connection."19  A  partner  cannot  secure  for  him- 
self that  which  it  is  his  duty  to  obtain,  if  at  all,  for  the  firm.20 
"Good  faith  requires  that  a  partner  shall  not  obtain  a  private 
advantage  at  the  expense  of  the  firm.  He  is  bound,  in  all 
transactions  affecting  the  partnership,  to  do  his  best  for  the 
common  body,  and  to  share  with  his  copartners  any  benefit 
which  he  may  have  been  able  to  obtain  from  other  people,  and 

it>Aas  v.  Benham,  [1891]  2  Ch.  255,  65  Law  Times  (N.  S.)  25,  19 
Eng.  Rul.  Cas.  589.  See,  also,  Raymond  v.  Vaughn,  18  111.  256.  In 
Latta  v.  Kilbourn,  150  U.  S.  524,  541,  Burdick's  Cases,  503,  Mechem's 
Cases,  212,  Mr.  Justice  Jackson,  speaking  for  the  court,  said  that  it 
is  "well  settled  that  one  partner  cannot,  directly  or  indirectly,  use 
partnership  assets  for  his  own  benefit;  that  he  cannot,  in  conducting 
the  business  of  a  partnership,  take  any  profit  clandestinely  for  him- 
self; that  he  cannot  carry  on  the  business  of  the  partnership  for  his 
private  advantage;  that  he  cannot  carry  on  another  business  in  com- 
petition  or  rivalry  with  that  of  the  firm,  thereby  depriving  it  of  the 
benefit  of  his  time,  skill,  and  fidelity,  without  being  accountable  to 
his  copartners  for  any  profit  that  may  accrue  to  him  therefrom;  that 
he  cannot  be  permitted  to  secure  for  himself  that  which  it  is  his 
duty  to  obtain,  if  at  all,  for  the  firm  of  which  he  is  a  member;  nor 
can  he  avail  himself  of  knowledge  or  information  which  may  be 
properly  regarded  as  the  property  of  the  partnership,  in  the  sense 
that  it  is  available  or  useful  to  the  firm  for  any  purpose  within  the 
scope  of  the  partnership  business." 

-oKimberly  v.  Arms,  129  U.  S.  512;  Hill  v.  Miller,  78  Cal.  149; 
Tebbetts  v.  Dearborn,  74  Me.  392;  Filbrun  v.  Ivers,  92  Mo.  388,  4  S. 
W.  674;  Coursin's  Appeal,  79  Pa.  220. 


AS  TO  GOOD  FAITH.  155 

in  which  the  firm  is,  in  honor  and  conscience,  entitled  to  par- 
ticipate."21 Thus,  a  partner  cannot  buy  up  a  claim  against 
the  firm.  If  he  takes  an  assignment  of  such  a  claim,  he  holds 
it  for  the  firm,  and  is  entitled  to  charge  against  the  firm  only 
the  amount  he  actually  paid  out.22  So,  a  partner  cannot  ac- 
quire an  adverse  title  or  interest  in  the  property  of  the  part- 
nership, and  hold  it  against  the  firm.23  A  partner  who 
secretly  obtains  in  his  own  name  a  renewal  of  the  lease  of  the 
premises  upon  which  the  firm  transacts  business  must  hold  it 
for  the  firm.24  If  a  partner  is  buying  or  selling  property  for 
a  firm,  he  cannot  sell  to  it  or  buy  from  it  at  a  profit  to  him- 

21  Lindl.  Partn.  p.  305;  Carter  v.  Home,  1  Eq.  Cas.  Abr.  7. 

22Easton  v.  Strouther,  57  Iowa,  506,  10  N.  W.  877;  Pilbrun  v. 
Ivers,  92  Mo.  388,  4  S.  W.  674.  It  operates  as  payment  of  the  claim 
in  the  absence  of  some  equity  to  keep  it  alive.  Coleman  v.  Coleman, 
78  Ind.  344;  Booth  v.  Farmers'  &  Mechanics'  Nat.  Bank,  74  N.  Y.  228. 

asCrosswell  v.  Lehman,  54  Ala.  363;  Laffan  v.  Naglee,  9  Cal.  662; 
Roby  v.  Colehour,  135  111.  300,  25  N.  E.  777;  Anderson  v.  Lemon,  8 
N.  Y.  236;  "Weston  v.  Ketcham,  7  Jones  &  S.  54;  Eakin  v.  Shumaker, 
12  Tex.  51;  Forrer  v.  Forrer's  Ex'rs,  29  Grat.  (Va.)  134;  Kinsman 
v.  Parkhurst,  18  How.  289;  Washburn  v.  Washburn,  23  Vt.  576.  In 
the  case  of  Miller  v.  O'Boyle,  89  Fed.  140,  plaintiff  and  defend- 
ant entered  into  a  partnership  for  the  purpose  of  carrying  out  a 
contract  for  public  work  awarded  to  them  as  associates  by  a  Mexican 
city.  Defendant,  who  was  to  furnish  the  money  for  the  enterprise, 
went  to  Mexico  for  the  purpose  of  closing  up  the  contract,  and  fur- 
nishing the  required  bonds.  Owing  to  the  receipt  of  a  false  report 
affecting  the  financial  standing  of  plaintiff,  the  authorities  refused 
to  close  the  contract  with  him  as  a  party.  Defendant,  without  ad- 
vising plaintiff  of  the  reasons  for  such  refusal,  and  without  plaint- 
iff's knowledge,  obtained  a  contract  for  the  work  in  his  own  name. 
It  was  held  that  he  held  such  contract  for  the  partnership,  and  that 
plaintiff  was  entitled  to  a  preliminary  injunction  to  prevent  his  ex- 
clusion from  participating  in  the  management  of  the  business. 

24Sneed  v.  Deal,  53  Ark.  152,  13  S.  W.  799;  Leach  v.  Leach,  IS 
Pick.  (Mass.)  68;  Struthers  v.  Pearce,  51  N.  Y.  357;  Mitchell  v. 
Reed,  61  N.  Y.  123;  Johnson's  Appeal,  115  Pa.  129,  8  Atl.  36.  Com- 
pare Chittenden  v.  Witbeck,  50  Mich.  401,  15  N.  W.  526;  Phillips  v. 
Reeder,  18  N.  J.  Eq.  95. 


L56  RIGHTS  OF  PARTNERS. 

-elf.1-'"'  Any  reward  or  commissions  which  a  partner  obtains 
from  third  persons  for  inducing  (he  linn  to  enter  into  partic- 
ular transactions  must  be  accounted  for  to  the  firm.20 

Information  Acquired  as  Partner. 

If  a  member  of  a  partnership  firm  avails  himself  of  infor- 
mation obtained  by  him  in  the  course  of  the  transaction  of 
partnership  business,  or  by  reason  of  his  connection  with  the 
firm,  for  any  purpose  within  the  scope  of  the  partnership  busi- 
ness, or  for  any  purpose  which  would  compete  with  (he  part- 
nership business,  he  is  liable  to  account  to  the  firm  for  any 
benefil  he  may  obtain  from  the  use  of  such  information;  but 
if  he  uses  the  information  for  purposes  which  are  wholly  with- 
out the  scope  of  the  partnership  business,  and  not  competing 
with  it,  the  firm  is  not  entitled  to  an  account  of  such  benefit.-7 

25  Nelson  v.  Hayner,  66  111.  487;  Emery  v.  Parrott,  107  Mass.  95; 
Comstock  v.  Buchanan,  57  Barb.  (N.  Y.)  127;  Bentley  v.  Craven,  IS 
Beav.  75;  Dunne  v.  English,  18  Eq.  Cas.  524.  A  partner  is,  by  virtue 
of  the  partnership  relation,  incapacitated  to  purchase  or  deal  in  the 
partnership  property  for  his  own  benefit,  and  his  purchase  will  be 
held  to  be  in  trust  for  the  benefit  of  the  copartnership.  Winstanley 
v.  Gleyre,  146  111.  27,  34  N.  E.  628. 

-«>  Hodge  v.  Twitchell,  33  Minn.  389,  23  N.  W.  547;  Newell  v.  Coch- 
ran, 41  Minn.  374,  43  N.  W.  84;  Whitman  v.  Bowden,  27  S.  C.  53,  2 
S.  E.  630;  Grant  v.  Hardy,  33  Wis.  668.  See  Short  v.  Stevenson,  63 
Pa.  95.  A  contract  between  a  partner  and  a  third  party,  that  such 
a  commission  should  be  paid,  is  void.  Gleason  v.  Chicago,  M.  & 
St.  P.  R.  Co.  (Iowa),  43  N.  W.  517. 

27Aas  v.  Benham  [1891],  2  Ch.  244,  65  Law  Times  (N.  S.)  25,  19 
Eng.  Rul.  Cas.  582;  Latta  v.  Kilbourn,  150  U.  S.  524,  Burdick's  Cases, 
503,  Mechem's  Cases,  212.  Compare  Cassels  v.  Stewart,  L.  R.  6  App. 
Cas.  64.  "As  regards  the  use  by  a  partner  of  information  obtained 
by  him  in  the  course  of  the  transaction  of  partnership  business,  or 
by  reason  of  his  connection  with  the  firm,  the  principle  is  that,  if 
he  avails  himself  of  it  for  any  purpose  which  is  within  the  scope 
of  the  partnership  business,  or  of  any  competing  business,  the  profits 
of  which  belong  to  the  firm,  he  must  account  to  the  firm,  for  any 
benefits  which  he  may  have  derived  from  such  information;  but 
there  is  no  principle  or  authority  which  entitles  a  firm  to  benefits 


AS  TO  SEPARATE  BUSINESS. 


Eight  to  Carry  ox  Separate  Business. 

87.  Apartner  has  np  ri^ht  to  carry  on  a  separate  business 
in  competition  with  the  firm. 

88.  In  the  absence  of  any  agreement  to  the  contrary,  a 
partner  may  carry  on  a  separate  non-competing  busi- 
ness. 

Competing  Business. 

It  is  clear  that  a  partner  is  not  entitled  to  carry  on  a  sep- 
arate business  of  the  same  nature  as  that  of  the  firm.  If  he 
does  engage  in  a  business  which  competes  with  the  firm,  he 
must  account  to  his  copartners  for  the  profits  derived  there- 
from.28 Thus,  a  partner  in  a  firm  constituted  for  the  pur- 
derived  by  a  partner  from  the  use  of  information  for  purposes  which 
are  wholly  without  the  scope  of  the  firm's  business,  nor  does  the  lan- 
guage of  Lord  Justice  Cotton  in  Dean  v.  Macdowell,  8  Ch.  Div.  345, 
warrant  any  such  notion.  By  'information  which  the  partnership 
is  entitled  to'  is  meant  information  which  can  be  used  for  the  pur- 
poses of  the  partnership.  It  is  not  the  source  of  the  information, 
but  the  use  to  which  it  is  applied,  which  is  important  in  such  mat- 
ters. To  hold  that  a  partner  can  never  derive  any  personal  benefit 
from  information  which  he  obtains  as  a  partner  would  be  mani- 
festly absurd.  Suppose  a  partner  to  become,  in  the  course  of  carry- 
ing on  his  business,  well  acquainted  with  a  particular  branch  of 
science  or  trade,  and  suppose  him  to  write  and  publish  a  book  on 
the  subject,  could  the  firm  claim  the  profits  thereby  obtained?  Ob- 
viously not,  unless,  by  publishing  the  book,  he  in  fact  competed  with 
the  firm  in  their  own  line  of  business."  Aas  v.  Benham  [1891],  2 
Ch.  255,  65  Law  Times  (N.  S.)  25,  19  Eng.  Cas.  589. 

ssLockwood  v.  Beckwith,  6  Mich.  168;  Todd  v.  Rafferty's  Adm'rs, 
30  N.  J.  Eq.  254;  Long  v.  Majestre,  1  Johns.  Ch.  (N.  Y.)  305;  Bast's 
Appeal,  70  Pa.  301;  McMahon  v.  McClernan,  10  W.  Va.  419;  Fletcher 
v.  Ingram,  46  Wis.  191,  204,  50  N.  W.  424;  Latta  v.  Kilbourn,  150 
U.  S.  524,  Burdick's  Cases,  503,  Mechem's  Cases,  212:  Marshall  v. 
Johnson,  33  Ga.  500;  Aas  v.  Benham  [1891],  2  Ch.  255.  Compare 
Pierce  v.  Daniels,  25  Vt.  624.  A  partner  may  be  enjoined  from  en- 
gaging in  a  competing  business.    Marshall  v.  Johnson,  33  Ga.  500. 


15  S  RIGHTS  OF  PARTNERS. 

pose  of  locating  and  developing  mining  properties  must  ac- 
count to  the  firm  for  all  mines  located  and  sold  by  him  dur- 
ing the  partnership.29  This  rule  is  a  necessary  consequence 
of  the  principle  which  prohibits  a  partner  from  making  gains 
at  the  expense  of  his  copartners. 

Noncompeting  Business. 

In  the  absence  of  an  express  contract  to  the  contrary,  a  part- 
ner may  carry  on  business  outside  of  the  scope  of  the  firm 
business  in  a  manner  consistent  with  his  duties  as  a  partner.30 
Even  where  he  has  agreed  not  to  carry  on  any  separate  busi- 
ness, he  need  not  account  to  his  partners  for  the  profits  of  a 
separate  business  carried  on  in  violation  of  the  aggreement 
unless  the  business  is  a  competing  one,  or  falls  within  the 
scope  of  the  firm  business,31  though,  of  course,  the  other  part- 
ners would  have  a  remedy  by  injunction  or  damages  on  the 
contract. 


29  Jennings  v.  Rickard,  10  Colo.  395. 

30  wheeler  v.  Sage,  1  Wall.  (U.  S.)  518;  Belcher  v.  Whittemore, 
134  Mass.  330,  Burdick's  Cases,  515. 

3i  Dean  v.  Macdowell,  8  Ch.  Div.  345;  Aas  v.  Benham  [1891],  2 
Ch.  244,  19  Eng.  Rul.  Cas.  589;  Latta  v.  Kilbourn,  150  U.  S.  524,  Bur- 
dick's Cases,  503,  Mechem's  Cases,  212;  Metcalfe  v.  Bradshaw,  145 
111.  124,  33  N.  E.  1116.  One  of  a  firm  of  attorneys  is  entitled  to  re- 
tain for  himself  the  compensation  he  receives  for  acting  as  exec- 
utor of  an  estate.  Metcalfe  v.  Bradshaw,  145  111.  124,  33  N.  E.  1116. 
"Although  a  partner  carries  on  a  business,  for  his  private  benefit, 
which  is  similar  to  that  of  the  firm,  he  will  not  be  answerable  to 
his  copartners  for  the  profits  if  the  business  is  really  different  from 
that  of  the  firm.  For  example,  a  member  of  a  firm  of  warehouse- 
men does  not  compete  with  his  partnership  in  owning  and  man- 
aging wharf-boats  (citing  Northrup  v.  Phillips,  99  111.  449).  Nor 
does  a  partner  in  a  firm  of  real  estate  brokers  interfere  with  its 
business  by  engaging  in  the  purchase  and  sale  of  real  estate  as  an 
individual  speculation  [citing  Latta  v.  Kilbourn,  150  U.  S.  524,  Bur- 
dick's Cases,  503,  Mechem's  Cases,  212.]  The  case  last  cited  shows 
that  the  question  of  fact  whether  a  partner  is  carrying  on  a  busi- 
ness in  competition  with  his  firm  may  be  a  difficult  one, — one  upon 


CONTRIBUTION  AND  INDEMNITY.  159 


Right  to  Contribution  and  Indemnity. 

89.  Every  partner  is  entitled  to  be  indemnified  in  account 
with  the  firm  for  payments  and  liabilities  incurred  by. 
him — 

(a)  In  the  ordinary  and  proper  conduct  of  the  business  of 

the  firm. 

(b)  In  or  about  anything  done  for  the  preservation  of  the 

business  or  property  of  the  firm.32 

In  General. 

Every  member  of  an  ordinary  firm  is  to  a  certain  extent 
both  a  principal  and  an  agent.33  He  is  liable,  as  a  principal, 
to  the  debts  and  engagements  of  the  firm,  and  in  respect  to 
them  he  is  entitled  to  contribution  from  his  copartners,  for 
they  are  joint  principals  with  him,  and  have  no  right  to  throw 
on  him  alone  the  burden  of  obligations  which  are  theirs  as 
much  as  his.34  So,  each  member,  as  an  agent  of  the  firm,  is 
entitled  to  be  indemnified  by  the  firm  against  losses  and  ex- 
penses bona  fide  incurred  by  him  for  the  benefit  of  the  firm 

which  different  courts  will  entertain  contradictory  opinions,  but  that 
the  rule  of  law  applicable,  when  the  facts  have  been  determined,  is 
clear  and  simple."     Burdick,  Partn.  310,  311. 

In  Burr  v.  De  La  Vergne,  102  N.  Y.  415,  7  N.  E.  366,  it  was  held 
that  inventions  made  by  a  partner,  although  relating  to  improve- 
ments of  machinery  owned  by  the  firm,  are  his  separate  property, 
unless  the  making  of  such  inventions  is  within  the  scope  of  the 
partnership  business,  or  there  is  an  agreement  that  they  shall  be- 
long to  the  firm. 

32  The  above  black-letter  text  is  taken  from  Pollock,  Partn.,  art.  33. 
It  has  been  expressly  enacted  in  terms  by  the  English  partnership 
act  (§  24).  The  body  of  the  text  of  this  section  is  largely  a  con- 
densation from  Lindl.  Partn.  p.  367  et  seq. 

33  See  ante,  c.  1,  "Agency  as  a  Test  of  Partnership."  See,  also, 
post,  c.  9,  "Rights  and  Liabilities  as  to  Third  Persons." 

3*  Lindl.  Partn.  p.  367;  Downs  v.  Jackson,  33  111.  464;  Lyons  v. 
Murray,  95  Mo.  23,  8  S.  W.  170;  Forbes  v.  Webster,  2  Vt.  58. 


1(J0  RIGHTS  OF  PARTNERS. 

while  pursuing  the  authority  conferred  upon  him  by  the 
agreement  entered  into  be!  ween  himself  and  his  copartners.35 
But  a  partner  has  no  righl  to  charge  the  firm  with  losses  or 
expenses  caused  by  his  own  negligence  or  want  of  skill,  or  in 
disregard  of  the  authority  reposed  in  him,36  and  of  course  the 
righl  to  contribution  or  indemnity  may  be  excluded  by  agree- 
ment,37 or  by  fraud  in  inducing  one  to  become  a  partner,33 
A  purchaser  of  a  partner's  share  cannot  be  compelled  to  make 
contribution,  though,  so  far  as  the  firm  property  yvill  go,  it 
may  be  withheld  from  him,  as  be  purchases  subject  to  all  the 
firm  debts;  but  if  it  has  been  paid  oyer  to  him,  it  cannot  be 
recovered  hack,  because  it  is  a  voluntary  payment.39 

A  partner  may  charge  the  firm  with  money  expended  by 
him  for  the  preservation  or  continuance  of  the  partnership 
concern.40 


35  Wheeler  v.  Arnold,  30  Mich.  304;  Christian  &  Craft  Grocery  Co. 
v.  Hill,  122  Ala.  490,  26  So.  149;  Lyons  v.  Lyons,  207  Pa.  7,  56  Atl.  54. 

••«;  McFadden  v.  Leeka,  48  Ohio  St.  513,  28  N.  E.  874;  Thomas  v. 
Atherton,  10  Ch.  Div.  186;  Cragg  v.  Ford,  1  Younge  &  C.  Ch.  280. 

37Lindl.  Partn.  p.  369;  Gillan  v.  Morrison,  1  De  Gex  &  S.  421;  In 
re  Worcester  Corn  Exchange  Co.,  3  De  Gex,  M.  &  G.  180;  McFadden 
v.  Leeka,  48  Ohio  St.  513,  28  N.  E.  874,  Mechem's  Cases,  232. 

ssNewbigging  v.  Adam,  34  Ch.  Div.  582. 

30  Clayton  v.  Davett  (N.  J.  Eq.),  38  Atl.  308,  Burdick's  Cases,  521. 

40  Matthews  v.  Adams,  84  Md.  143,  35  Atl.  60;  Ex  parte  Chippen- 
dale, 4  De  Gex,  M.  &  G.  42,  wherein  Turner,  J.,  placed  this  rule  upon 
the  ground  of  implied  authority.  But  Pollock  (Dig.  Partn.  art.  33) 
says:  "This  duty,  imposed  on  the  firm  to  indemnify  any  one  of  its 
members  against  extraordinary  outlays  for  necessary  purposes,  is 
one  of  a  class  of  duties  quasi  ex  contractu,  which  are  recognized  by 
the  law  of  England  only  very  sparingly,  and  under  special  circum- 
stances. It  is  outside  the  rules  of  agency,  and  has  still  less  to  do 
with  trust.  Real  analogies  are  to  be  found  in  salvage  and  average." 
The  weight  of  opinion  follows  the  opinion  of  Turner,  J.,  supra, 
rather  than  that  of  Pollock.  See  Wright  v.  Hunter,  5  Ves.  793; 
Sells  v.  Hubbell's  Adm'rs,  2  Johns.  Ch.  (N.  Y.)  397;  Meserve  v.  An- 
drews, 106  Mass.  419;  Lee's  Ex'x  v.  Dolan's  Adm'x,  39  N.  J.  Eq.  193; 
Bates  v.  Lane,  62  Mich.  132,  28  N.  W.  753. 


CONTRIBUTION  AND  INDEMNITY.  161 

Limit  as  to  Amount  of  Contribution. 

The  total  amount  recoverable  is  not  necessarily  limited  by 
the  nominal  capital  of  the  partnership  for  losses  and  expenses 
may  and  often  do  exceed  the  capital.41  Neither  is  the  amount 
which  a  partner  may  be  called  on  to  contribute  necessarily 
limited  to  a  sum  proportionate  to  his  share  in  the  partnership 
for  if  some  of  the  partners  are  unable  to  contribute  their 
share,  the  solvent  partners  must  contribute  the  whole 
amount.42  The  limit  of  contribution  may  be  fixed  by  express 
agreement  between  the  members  of  a  firm,  and  in  that  case 
no  partner  can  call  upon  the  others  to  exceed  the  amount 
fixed,  however  great  may  have  been  the  amount  of  his  own 
outlay  upon  behalf  of  the  firm.43  And  on  the  same  principle 
one  who  is  by  the  agreement  bound  to  contribute  labor  as  his 
share  of  the  capital,  cannot  be  compelled  to  contribute  to  losses 
of  capital  by  the  other  partner.433- 

Contribution  in  Illegal  Transactions. 

It  is  a  general  principle  in  the  law  of  torts  that  there  is  no 
contribution  between  wrong-doers;  but  this  doctrine,  as  ap- 
plied to  partners,  is  subject  to  considerable  modification. 
"The  claim  of  a  partner  to  contribution  from  his  copartners 
in  respect  of  a  partnership  transaction  cannot  be  defeated  on 
the  ground  of  illegality,  unless  the  partnership  is  itself  an  il- 
legal partnership,  or  unless  the  act  relied  on  as  the  basis  of 
the  claim  is  not  only  illegal,  but  has  been  commmitted  by  the 
partner  seeking  contribution,  when  he  knew  or  ought  to  have 
known  of  its  illegality.44     In  any  of  these  cases,  he  can  ob- 

«  Ex  parte  Chippendale,  4  Dex,  M.  &  G.  36,  42. 
•»2  McKewan's  Case,  6  Ch.  Div.  447. 

«  Scudder  v.  Ames,  89  Mo.  496,  14  S.  W.  525;  In  re  Worcester 
Corn  Exchange  Co.,  3  De  Gex,  M.  &  G.  180. 

"a  Meadows  v.  Moquot,  22  Ky.  L.  R.  1646,  61  S.  W.  28. 
•iiAdamson  v.  Jarvis,  4  Bing.  66;   Betts  v.  Gibbins,  2  Adol.  &  E. 
11 


162  RIGHTS  OF  PARTNERS. 

tain  imt  assistance  against  his  copartners,  and  must  abide  the 
consequences  of  his  own  willful  breach  of  the  Law.48  Bu1  it' 
the  partnership  is  nol  of  Itself  illegal,  and  if  the  partner, 
claiming  .contribution  lias  not  himself  been  personally  guilty, 

his  claim  will  prevail,  although  the  loss  in  respect  of  which 
it  is  made  may  have  arisen  from  an  unlawful  act."40 

How  and  When  Enforced. 

The  right  to  contribution  and  indemnity  cannot  be  en- 
forced until  the  partnership  ha-  been  dissolved,  and  its  ac- 
counts sen  led.  As  will  be  seen  in  a  subsequent  chapter,  it  is 
a  general  rule  that  an  action  at  law  cannot  be  maintained  by 
one  partner  against  his  copartners  in  respect  to  a  partnership 
tran-action,  and  that  the  only  remedy  between  partners  is  a 
suit  in  equity  for  a  dissolution  of  the  firm,  and  a  settlement 
of  it<  affairs,  in  which  suit  all  the  rights  and  liabilities  of  the 
partners  between  themselves  will  be  adjusted.47 

Right  to  Compensation. 

qo.     A  partner  is  not  entitled  to  compensation  for  services 
in  the  transaction  of  firm  business,  except — 
Exception — 

(a)  Where  there  is  an  agreement  to  pay  it,  and 

(b)  Where  extra  trouble  has  been  caused  by  a  copartner's 
willful  neglect  of  his  duties. 

57;  Thomas  v.  Atherton,  10  Ch.  Div.  185.  Compare  Boggess  v.  Lilly. 
18  Tex.  200. 

46  Smith  v.  Ayrault,  71  Mich.  475,  39  N.  W.  724;  Aubert  v.  Maze, 
2  Bos.  &  P.  371;  Clayton  v.  Davett  (N.  J.  Eq.),  38  Atl.  308,  Burdick's 
Cases,  521. 

*<••  Lindl.  Partn.  p.  378.  See,  also,  Campbell,  7  CI.  &  F.  166;  Hor- 
bach's  Adm'rs  v.  Elder,  18  Pa.  33;  Clayton  v.  Davett  (N.  J.  Eq.),  38 
Atl.  308,  Burdick's  Cases,  521. 

*'  See  post,  c.  10,  "Actions."  See,  also,  generally,  Lawrence  v. 
Clark,  9  Dana  (Ky.)  257;  Kennedy  v.  McFadon,  3  Har.  &  J.  (Md.) 
194;  Eddins  v.  Menefee  (Tenn.  Ch.),  54  S.  W.  992. 


> 


RIGHT  TO  COMPENSATION.  163 

Tt  is  the  duty  of  partners  to  devote  their  time  to  carrying 
on  the  firm  business,  and,  in  the  absence  of  special  agreement, 
they  are  not  entitled  to  extra  compensation  therefor,  but  must 
be  content  with  their  share  of  the  profits.48  The  mere  fact 
that  one  partner  is  more  active  in  the  firm  business,  or  per- 
forms greater  or  more  valuable  services  than  his  copartner, 
will  not  entitle  him  to  extra  compensation.49  A  managing 
partner  is  not  entitled  to  salary,  in  the  absence  of  any  agree- 
ment to  pay  it.50  The  rule  that  a  partner  is  not  entitled  to 
compensation  for  his  services  applies  to  services  by  surviving 
partners  in  winding  up  the  business  and  disposing  of  part- 
nership assets,51  and  to  extra  services  caused  by  the  sickness 
of  a  partner,  as  this  is  a  risk  incidental  to  the  partnership  re- 
lation, and  therefore  assumed.52 

48  Lewis  v.  Moffett,  11  111.  392;  Burgess  v.  Badger,  124  111.  288,  14 
N.  E.  850;  O'Brien  v.  Hanley,  86  111.  278;  Ligare  v.  Peacock,  109  111. 
94;  Askew  v.  Springer,  111  111.  662;  Chamberlain  v.  Sawyers,  17  Ky. 
L.  R.  716,  32  S.  W.  475;  Major  v.  Todd,  84. Mich.  85,  47  N.  W.  841; 
Godfrey  v.  White,  43  Mich.  171,  5  N.  W.  243;  Eckert  v.  Clark,  14 
Misc.  18,  35  N.  Y.  Supp.  118;  Nicoll  v.  Town  of  Huntington,  1  Johns. 
Ch.  (N.  Y.)  166;  Bradford  v.  Kimberly,  3  Johns.  Ch.  (N.  Y.)  431; 
Paine  v.  Thacher,  25  Wend.  (N.  Y.)  450;  Lyon  v.  Snyder,  61  Barb. 
(N.  Y.)  172;  Redfield  v.  Gleason,  61  Vt.  220,  17  Atl.  1075;  Taylor  v. 
Dorr,  43  W.  Va.  351;  Lamb  v.  Wilson,  3  Neb.  (Unoff.)  496,  92  N.  W. 
167. 

•»'->King  v.  Hamilton,  16  111.  190;  Lewis  v.  Moffett,  11  111.  392; 
Roach  v.  Perry,  16  111.  37;  Burgess  v.  Badger,  124  111.  288,  14  N.  E. 
850;  Brownell  v.  Steere,  29  111.  App.  358;  Heckard  v.  Pay,  57  111. 
App.  20;  Heath  v.  Waters,  40  Mich.  457;  Beatty  v.  Wray,  19  Pa.  516; 
Drew  v.  Ferson,  22  Wis.  651. 

so  Evans  v.  Warner,  2  App.  Div.  (N.  Y.)  230;  Smith  v.  Brown,  44 
W.  Va.  342,  30  S.  E.  160. 

™  Kimball  v.  Lincoln,  5  111.  App.  316;  Barry  v.  Jones,  11  Heisk. 
(Tenn.)  206.  27  Am.  Rep.  742;  Denver  v.  Roane,  99  U.  S.  355. 
Under  special  circumstances,  a  surviving  partner  may  be  entitled  to 
extra  compensation  for  services.  Zell's  Appeal,  126  Pa.  329,  17  Atl. 
647;  Robinson  v.  Simmons,  146  Mass.  167,  15  N.  E.  558.  See,  also, 
'  Thayer  v.  Badger,  171  Mass.  279,  50  N.  E.  541. 

«a  Heath  v.  Waters,  40  Mich.  457. 


164  •      RIGHTS  OF  PARTNERS. 

Where,  however,  there  is  a  contract  for  compensation, 
either  express  <»r  implied  from  the  course  of  the  business  be- 
tween the  partners,  or  from  the  duties  and  obligations  im- 
posed by  the  articles,  it  may  be  recovered.53 

A  partner  may  recover  compensation  for  extra  trouble  and 
services  thrown  upon  him  by  a  copartner  who  has  willfully 
neglected  his  duties  as  a  partner.8  ' 


Right  to  Interest  on  Balances. 

91.  Interest  should  be  allowed  on  balances  in  a  partnership 
accounting  whenever  there  is  an  express  or  implied 
contract  to  pay  it. 

92.  In  the  absence  of  an  agreement  to  pay  interest,  it  should 
not  be  allowed  or  charged  upon  capital  paid  in,  ad- 
vances, overdrafts,  or  undivided  profits,  but  it  should 
be  charged  on  unpaid  subscriptions  to  capital. 

The  confusion  and  conflict  among  the  authorities  upon  the 
allowance  of  interest  in  partnership  accountings  is  so  great 
that  one  eminent  writer  upon  this  subject  has  said  that  the 

53  Lewis  v.  Moffett,  11  111.  392;  Keiley  v.  Turner,  81  Md.  269,  31 
Atl.  700;  Caldwell  v.  Leiber,  7  Paige,  Ch.  N.  Y.  488;  Emerson  v. 
Durand,  64  Wis.  Ill,  24  N.  W.  129.  A  promise  to  pay  for  extra 
services  will  not  be  implied  from  the  mere  rendition  of  such  serv- 
ices, McAllister  v.  Payne,  108  Ga.  517,  34  S.  E.  165;  no  matter  how 
great  the  excess  of  services  may  be,  Lewis  v.  Moffett,  11  111.  392; 
Roach  v.  Perry,  16  111.  37,  and  Burgess  v.  Badger,  124  111.  288,  14 
N.  E.  850. 

54  Denver  v.  Roane,  99  U.  S.  355;  Marsh's  Appeal,  69  Pa.  30;  Airey 
v.  Borham,  29  Beav.  620.  Where  a  partnership  contract  provided 
that  each  member  was  to  render  services,  and  it  appeared,  on  a 
settlement,  that  one  partner  had  furnished  all  the  capital,  and  had 
exercised  complete  management  and  control  over  the  firm  affairs, 
it  was  proper  to  allow  him  credit  for  his  services.  Mattingly  v. 
Stone's  Adm'r,  18  Ky.  L.  R.  187,  35  S.  W.  921,  Burdick's  Cases,  516. 


INTEREST  ON  BALANCES.  165 

authorities  did  not  justify  the  deduction  from  them  of  any 
general  principle  upon  this  important  subject;55  and  it  has 
very  frequently  been  said  that  each  case  must  be  determined 
upon  its  own  circumstances,  and  cannot  be  governed  by  any 
fixed  rules.56  So  far  as  a.  statement  of  the  circumstances  un- 
der which  an  agreement  to  pay  interest  will  be  implied,  this 
is  probably  correct,  for  the  existence  of  such  an  agreement  is 
a  question  of  fact,  and  the  circumstances  tending  to  prove  a 
fact  may  be  almost  infinite  in  variety.  But  in  cases  not  gov- 
erned by  agreement,  the  courts  must  apply  some  rule,  and  out 
of  the  conflicting  rules  adopted  by  different  courts,  those 
stated  above  in  the  black-letter  text  are  selected  as  being  in 
consonance  with  sound  principle.  These  rules  rest  upon  the 
principle  that  interest  can  be  properly  allowed  in  only  two 
classes  of  cases :  First,  where  there  is  a  contract,  express  or 
implied,  to  pay  it,  in  which  case  it  is  recoverable  because  it 
is  a  debt ;  and,  second,  where  there  has  been  a  wrongful  delay 
in  the  payment  of  money,  interest  may  be  allowed  as  damages 
for  the  delay.57 

Agreement  Express  or  Implied. 

Wherever  there  is  an  agreement,  either  express  or  implied, 
to  pay  interest  upon  capital  paid  or  unpaid,  or  upon  advances, 
or  undivided  profits,  it  should  be  allowed  or  charged  in  stat- 
ing the  partnership  accounts.58     The  obvious  reason  is  that  a 

65  Lindl.  Partn.  p.  389. 

66  Johnson  v.  Hartshorne,  52  N.  Y.  173;  Gyger's  Appeal,  62  Pa.  79, 
Burdick's  Cases,  586;  Kelley  v.  Shay,  206  Pa.  215,  55  Atl.  927; 
Buckingham  v.  Ludlum,  29  N.  J.  Eq.  350. 

57  Kelley  v.  Shay,  206  Pa.  215,  55  Atl.  928.  See,  also,  Hale,  Dam- 
ages, p.  144,  wherein  the  principles  upon  which  interest  is  awarded 
are  examined. 

esTaft  v.  Schwamb,  80  111.  289,  Burdick's  Cases,  577;  Keiley  v. 
Turner,  81  Md.  269,  31  Atl.  700;  Payne  v.  Freer,  91  N.  Y.  43;  Wells 
v.  Babcock,  56  Mich.  276,  22  N.  W.  809,  27  N.  W.  575;  Emerson  v. 
Durand,  64  Wis.  Ill,  24  N.  W.  129;   Prentice  v.  Elliott,  72  Ga.  154. 


166  RIGHTS  OF  PARTNERS. 

contracl  to  pay  interesl  creates  a  debt,  which  is,  of  course,  a 
proper  item  of  debil  <>r  credit.  Mercantile  usages  and  the 
course  of  trade  dealings  authorize  a  demand  for  interest  in 
cases  where  ii  would  not  otherwise  be  payable.  Accordingly, 
attention  musl  be  paid  no1  only  to  any  express  agreement,  bu1 
also  to  tlif  practice  of  each  particular  firm,  ;in<l  to  the  custom 
of  the  trade  it  carries  on.69 

Interest  in  Absence  of  Agreement — Capital. 

Partners  are  not  entitled  to  interest  upon  their  respective 
contributions  to  capital  which  have  been  actually  paid,  in  the 
absence  of  an  express  contract.  The  cases  are  generally 
agreed  upon  this  point.60  Even  if  one  partner  has  brought  in 
his  stipulated  capital,  and  the  other  has  not,  the  former  is  not 
entitled  to  interest  on  his  contribution  in  the  final  account- 
ing,6} though  some  cases  take  a  contrary  view,  and  allow  in- 
teresl in  such  a  case.02  It  would  seem  to  he  more  logical  to 
charge  the  delinquent  partner  with  interest  upon  the  amount 
he  ought  to  have  brougbl  in,  but  did  not,  than  to  allow  the 
other  partner  interest  upon  the  amount  brought  in  by  him  in 
consideration  of  a  share  in  the  profits.  The  results  in  the 
two  cases  would  be  very  different  where  the  agreed  contribu- 

Where  interest  on  capital  is  payable,  interest  stops  at  the  date  of 
dissolution,  unless  otherwise  agreed.  Johnson  v.  Hartshorne,  52 
N.  Y.  173;  Bradley  v.  Brigham,  137  Mass.  545;  Barfield  v.  Loughbor- 
ough, L.  R.  8  Ch.  1. 

•"■•■'  Lindl.  Partn.  p.  389;  Ex  parte  Chippendale,  4  De  Gex,  M.  &  Q. 
36.  See,  also,  Winchester  v.  Glazier,  152  Mass.  316,  25  N.  E.  728; 
Lockwood  v.  Roberts,  171  Mass.  109,  50  N.  E.  517. 

eo  Moss  v.  McCall,  75  111.  190;  Whitcomb  v.  Converse,  119  Mass.  38, 
Burdick's  Cases,  575,  Mechem's  Cases,  492;  Brown's  Appeal,  89  Pa. 
139. 

63  Lindl.  Partn.  p.  390;  Hill  v.  King,  3  De  Gex,  J.  &  S.  418;  Stokes 
v.  Hodges,  11  Rich.  Eq.  (S.  C.)  135;  Clark  v.  Worden,  10  Neb.  87, 
4  N.  W.  413. 

1  ■■-•  Hartman  v.  Woehr,  18  N.  J.  Eq.  383;  Ligare  v.  Peacock,  109  111. 
04;   Montague  v.  Hayes,  10  Gray  (Mass.)   609. 


INTEREST  ON  BALANCES.  167 

tions  were  unequal.  So,  if  one  partner  contributed  all  the 
capital,  and  the  other  merely  his  time  and  services,  the  for- 
mer cannot  claim  interest  on  his  capital.63 

The  reason  why  interest  should  not  be  allowed  on  capital 
is  that,  in  the  absence  of  an  express  contract  to  pay  it,  the 
reasonable  construction  of  the  partnership  contract  is  that  the 
capital  or  services  of  the  several  partners  are  to  be  compen- 
sated by  the  stipulated  share  of  the  profits,  and  there  is  no 
room  for  an  implied  agreement  to  pay  interest.  An  express 
contract  to  pay  interest  on  capital  may  be  implied  where  the 
partners  themselves  have  been  in  the  habit  of  charging  in- 
terest in  their  accounts.64 

Where  a  partner  has  agreed  to  pay  in  a  certain  amount  of 
capital,  and  has  failed  to  do  so,  it  is  proper  to  charge  him 
with  interest  on  the  amount,  such  interest  being  imposed  as 
damages  for  the  nonpayment  at  the  time  it  was  due.65 

Same— Advances,  Overdrafts,  and  Undivided  Profits. 

Interest  should  not  be  allowed  or  charged  upon  advances, 
overdrafts,  or  undivided  profits,  in  the  absence  of  a  special 
agreement  to  that  effect.06  Such  transactions  constitute 
merely  items  in  the  partnership  accounts,  and  until  the  ac- 

88  Rodgers  v.  Clement,  15  App.  Div.  561,  44  N.  Y.  Supp.  516;  Jack- 
son v.  Johnson,  11  Hun  (N.  Y.)  509;  Tutt  v.  Land,  50  Ga.  339;  Day 
v.  Lockwood,  24  Conn.  185.  Interest  is  not  recoverable  on  an  excess 
of  capital  contributed  to  a  partnership  by  one  partner,  on  the  ground 
that  he  devoted  his  time  and  money  to  carrying  on  the  partnership 
business,  whereas  the  other  partner  contributed  nothing  in  the  way 
of  time  or  labor.     Thompson  v.  Noble,  108  Mich.  19,  65  N.  W.  563. 

8* Cooke  v.  Benbow,  3  De  Gex,  J.  &  S.  1;  Millar  v.  Craig,  6  Beav. 
433.  See,  also,  Winchester  v.  Glazier,  152  Mass.  316,  25  N.  E.  728. 
But  compare  In  re  James,  146  N.  Y.  78,  40  N.  E.  876. 

8B  Ligare  v.  Peacock,  109  111.  94;  Hartman  v.  Woehr,  18  N.  J.  Eq. 
383. 

88  Seibert's  Assignee  v.  Ragsdale,  19  Ky.  L.  R.  1869,  44  S.  W.  653; 
Prentice  v.  Elliott,  72  Ga.  154;  Clark  v.  Worden,  10  Neb.  87,  4  N.  W. 
413;  Gilman  v.  Vaughan,  44  Wis.  646;  Gage  v.  Parmelee,  87  111.  329; 


16S  RIGHTS  OF  PARTNERS. 

counts  are  settled,  and  a  balance  struck,  there  is  no  duty  to 
pay  over  the  money,  and  there  tore  a  charge  of  interest  as  dam- 
ages cannot  he  justified.07  Nevertheless,  some  authorities 
take  a  differenl  view,  and  hold  that  interest  should  be  al- 
lowed <ui  advances  and  charged  on  overdrafts,  even  in  the  ab- 
sence of  a  special  contract  to  pay  it;  the  transaction  being 
considered  in  the  nature  of 'a  loan,  where  an  agreement  to 
pay  interest  is  implied.68 

i 
Partnership  Accounts. 

93.     Every  partner  is  entitled  to  have  proper  accounts  kept, 
and  to  inspect  them  at  all  reasonable  times. 

Lindley  says  that  it  is  one  of  the  clearest  rights  of  a  part- 
ner to  have  accurate  accounts  kept  of  all  the  firm  transactions, 
and  to  have  free  access  to  them  at  all  reasonable  times,00  and 

Sweeney  v.  Neely,  53  Mich.  421,  19  N.  W.  127;  Ashbrook  v.  Ashbrook, 
16  Ky.  L.  R.  593,  28  S.  W.  660. 

ciSeibert's  Assignee  v.  Ragsdale,  19  Ky.  L.  R.  1869,  44  S.  W. 
653;  Prentice  v.  Elliott,  72  Ga.  154;  Miller  v.  Lord,  11  Pick. 
(Mass.)  11. 

esKeiley  v.  Turner,  81  Md.  269,  31  Atl.  700;  Matthews  v.  Adams, 
84  Md.  143,  35  Atl.  60;  Folsom  v.  Marlette,  23  Nev.  459,  49  Pac.  39, 
Burdick's  Cases,  570;  Coldren  v.  Clark,  93  Iowa,  352,  61  N.  W.  1045; 
Lloyd  v.  Carrier,  2  Lans.  (N.  Y.)  364.  Where  a  partner  had  mis- 
appropriated firm  property  to  his  own  use,  he  was  held  properly 
chargeable  with  interest  on  its  value  from  the  date  of  appropria- 
tion. Folsom  v.  Marlette,  23  Nev.  459,  49  Pac.  39,  Burdick's  Cases, 
570. 

e»Lindl.  Partn.  p.  404.  See,  also,  Godfrey  v.  White,  43  Mich.  171; 
Hall  v.  Clagett,  48  Md.  223;  Webb  v.  Fordyce,  55  Iowa,  11,  1  N.  W. 
385,  Mechem's  Cases,  228;  Dimond  v.  Henderson,  47  Wis.  172,  21 
N.  W.  73;  Hughes  v.  Ewing,  162  Mo.  261,  62  S.  W.  465;  Rowe  v. 
Wood,  2  Jac.  &  W.  558;  Greatrex  v.  Greatrex,  1  De  Gex  &  S.  692. 
Of  course  a  partner  has  no  right  to  inspect  and  make  copies  from 
the  books  for  an  improper  purpose.  Trego  v.  Hunt  [1896],  App.  Cas. 
7,  Burdick's  Cases,  602,  Mechem's  Cases,  199. 


PARTNERSHIP  ARTICLES.  169 

this  right  of  inspection  has  been  extended  to  one  induced  by 
fraud  to  retire  from  the  firm  on  the  ground  that  there  never 
had  been  a  real  termination  of  his  rights  as  a  partner.693. 
And  it  is  each  partner's  duty  to  give  the  actual  bookkeeper  all 
information  necessary  to  enable  him  to  keep  proper  books. 
If  no  books  of  account  are  kept,  or  if  they  are  kept  in  such  a 
manner  as  to  be  unintelligible,  or  if  they  are  destroyed  or 
wrongfully  withheld,  and  an  accounting  is  directed  by  the 
court,  every  presumption  will  be  made  against  those  to  whose 
negligence  or  misconduct  the  nonproduction  of  proper  ac- 
counts is  due,70  but  a  partner's  account  should  not  be  charged 
for  losses  that  may  have  resulted  from  an  unscientific  system 
of  bookkeeping,  without  any  showing  of  wrong  motive.703. 
In  the  absence  of  any  different  agreement,  the  books  should 
be  kept  at  the  principal  place  of  business  of  the  partnership.71 
One  partner  has  no  right  to  keep  the  books  in  his  own  exclu- 
sive custody,  or  to  remove  them  from  the  place  of  business  of 
the  firm.72 


Duty  to   Conform   to  Partnership  Articles. 

94.  It  is  the  duty  of  partners  to  conform  in  all  respects  to 
the  partnership  agreement,  and  to  confine  their  acts 
within  the  scope  of  the  partnership  business. 

This  duty  is  too  obvious  to  require  extended  comment. 
Contracts  are  made  to  be  kept,  not  broken.     If  the  partners 

00a  Cohn  v.  Hessel,  95  App.  Div.  548,  88  N.  Y.  Supp.  1057. 
ToLindl.  Partn.  p.  405.     See,  also,  Gage  v.  Parmelee,  87  111.  329; 
Pierce  v.  Scott,  37  Ark.  308. 

™a  Knipe  v.  Livingston,  209  Pa.  49,  57  Atl.  1130. 

n  Pollock,  Partn.  art.  39. 

«  Taylor  v.  Davis,  3  Beav.  388,  note. 


i;,)  RIGHTS  OF  PARTNERS. 

sustain  a  Loss  by  reason  of  their  copartner's  default  in  this 
regard,  he  must  indemnify  them.73 


Duty  to  Exercise  Care  and  Skill. 

95.  A  .partner  is  liable_ tgJ?  js ^rnjQartner_for_any  failure  to 
exercise  reasonable  care  and  skill  in.  the  conduct  of  the 
partnership  business. 

Partners  as  agents  for  their  firm  in  the  conduct  of  its  busi- 
ness must  exercise  reasonable  cure  and  skill,  and  are  liable 
for  any  loss  or  damage  caused  by  their  failure  to  do  so.'4 
But  a  partner  is  not  solely  Liable  for  losses  caused  by  a  lack 
of  discretion  or  good  judgment  not  amounting  to  negligence 
or  bad  faith,  bui  the  loss  falls  upon  all  the  partners  as  a 
firm.7"'  A  partner  is  not  entitled  to  damages  from  a  copart- 
ner for  mere  neglect  of  the  interests  of  the  firm,  without  any 

78  Murphy  v.  Crafts,  13  La.  Ann.  519,  Mechem's  Cases,  227;  Marsh's 
Appeal,  69  Pa.  30;  Campbell  v.  Campbell,  7  Clark  &  F.  166.  The  sale 
by  a  partner  of  his  interest  in  the  firm  proves  his  right  of  action  for 
breach  of  the  articles.  Gwens  v.  Berry,  21  Ky.  L.  R.  680,  52  S.  W. 
942. 

T-tYetzer  v.  Applegate,  83  Iowa,  726,  50  N.  W.  66;  Morris  v.  Wood 
(Tenn.  Ch.)   35  S.  W.  1013,  Burdick's  Cases,  531. 

"Charlton  v.  Sloan,  76  Iowa,  288,  41  N.  W.  303;  Morrison  v. 
Smith,  81  111.  221;  Fordyce  v.  Shriver,  115  111.  530;  Knipe  v.  Liv- 
ingston, 209  Pa.  49,  57  Atl.  130.  And  see  §  89,  ante.  A  partner  in  a 
banking  business,  to  whom  is  left  the  active  management  of  the 
business,  is  not  liable  for  honest  errors  in  judgment,  nor  for  the 
failure  to  take  the  utmost  precaution  possible,  in  making  invest- 
ments for  the  bank.  Exchange  Bank  of  Leon  v.  Gardner,  104  Iowa, 
176,  73  N.  W.  591.  A  duplicate  payment  of  a  bill,  made  by  mistake 
in  the  regular  course  of  business  by  one  partner,  cannot  be  charged 
to  him  on  an  accounting  unless  he  was  grossly  negligent.  Tygart 
v.  Wilson,  39  App.  Div.  58,  56  N.  Y.  Supp.  827.  Losses  by  injury  to 
the  stock  in  trade  or  the  partnership  assets  must  be  borne  by  the 
firm.     Savery  v.  Thurston,  4  111.  App.  55. 


POWER  OF  MAJORITY.  171 

fraudulent  misconduct  or  willful  and  positive  refusal  to  per- 
form duties  devolving  upon  him  as  a  partner.76 


Power  of  Majority. 

96.  The  powers  of  a  majority  of  the  partners  may  be  regu- 
lated by  agreement. 

97.  In  the  absence  of  special  agreement,  the  decision  of  the_ 
majority^j£jpontrolling  in  all  matters   arising   in   the 
ordinary  course  of  the  partnership  business,  provided — 

Proviso — The  majority  must  act  in  good  faith. 

98.  In  the  absence  of  special  agreement,  a  majority  cannot 
bind  dissenting  partners  by  a  change  in  the  nature  of 
theTbusiness,  or  the  terms  of  association. 

Express  Agreements. 

To  avoid  disputes,  the  articles  of  partnership  ought  to  ex- 
pressly provide  how  far  the  decision  of  a  majority  of  the  part- 
ners is  to  be  binding  upon  them  all.  Whatever  provision  is 
agreed  to  is,  of  course,  binding  upon  all. 

In  Absence  of  Agreement. 

In  the  absence  of  any  express  agreement  upon  the  subject, 
the  law  fixes  the  powers  of  the  majority.  Whether  or  not 
the  will  of  the  majority  shall  prevail  in  any  given  matter  de- 
pends upon  the  nature  of  the  question  at  issue,  for  there  is 
an  important  distinction  between  differences  which  relate  to 
matters  incidental  to  carrying  on  the  Legitimate  business  of 
a  partnership,  and  differences  which  relate  to  matters  with 
which  it  was  never  intended  that  the  partnership  should  con- 
cern itself.77 

t«  Brownell  v.  Steere,  29  111.  App.  358,  affirmed  128  111.  209,  21 
N.  E.  3. 

"  Lindl.  Partn.  p.  314. 


172  RIGHTS  OF  PARTNERS. 

Same — Mailers  Willi  in  Scope  of  Partnership  Business. 

Whenever  a  partnership  is  formed  by  more  than  two  per- 
BonSj  in  the  absence  of  any  express  provisions  to  the  contrary, 
there  is  always  an  implied  understanding  thai  the  acts  of  the 
majority  are  to  prevail  over  those  of  the  minority  as  to  all 
matters  within  the  scope  of  the  common  business.78  But  even 
in  these  matters,  the  decision  of  the  majority  will  not  pre- 
vail unless  they  have  acted  in  good  faith  for  the  benefit  of  the 
firm,  and  not  for  their  own  private  benefit.79  The  minority 
should  ordinarily  have  notice  of  the  proposed  action,  and  an 
opportunity  to  present  their  objections.80 

Where  the  partners  are  equally  divided  as  to  any  proposed 
action,  those  who  iorbid  a  change  will  prevail." 

rrw  i     i     ...Li  »■■    ■  «    ■!  im    '" ii   r  r         •     ■     ■  *'  "  '     '   " 

Same — Change  in  Business  or  Terms  of  Association. 

When  the  proposed  action  relates  to  matters  with  which  it 
was  never  intended  that  the  firm  should  concern  itself,  it  is 

78  Johnston  v.  Dutton's  Adm'r,  27  Ala.  245,  Mechem's  Cases,  304; 
Western  Stage  Co.  v.  Walker,  2  Iowa,  504;  Peacock  v.  Cummings, 
46  Pa.  434;  Faulds  v.  Yates,  57  111.  416;  Waterbury  v.  Merchants' 
Union  Exp.  Co.,  50  Barb.  (N.  Y.)  157;  Latta  v.  Kilbourn,  150  U.  S. 
545,  Burdick's  Cases,  503,  Mechem's  Cases,  212. 

to  Johnston  v.  Dutton's  Adm'r,  27  Ala.  245,  Mechem's  Cases,  304; 
Western  Stage  Co.  v.  Walker,  2  Iowa,  513,  65  Am.  Dec.  789;  Const 
v.  Harris,  Turn.  &  R.  525;    Blisset  v.  Daniel,  10  Hare,  493. 

so  Western  Stage  Co.  v.  Walker,  2  Iowa,  513,  65  Am.  Dec.  789; 
Johnston  v.  Dutton's  Adm'r,  27  Ala.  245,  Mechem's  Cases,  304;  Story, 
Partn.  §  123. 

siLindl.  Partn.  p.  314;  Johnston  v.  Dutton's  Adm'r,  27  Ala.  245, 
Mechem's  Cases,  304.  It  is  upon  this  principle  that  one  partner  can- 
not either  engage  a  new  or  discharge  an  old  servant,  against  the 
will  of  his  copartner.  Donaldson  v.  Williams,  1  Cromp.  &  M.  345. 
Nor,  if  the  lease  of  the  partnership  place  of  business  expires,  insist 
on  renewing  the  lease,  and  continuing  the  business  at  the  old  place. 
Clements  v.  Norris,  8  Ch.  Div.  129. 

"The  majority  of  the  members  of  a  partnership  may,  in  case  of 
diversity  of  opinion,  manage  the  business  as  they  see  fit,  acting  in 
good   faith,  and   within  the  powers  necessary  to  the  management, 


w 


DIVISION  OF  PROFITS.  173 

well  settled  that  no  majority,  however  large,  can  lawfully  en- 
gage the  firm  in  such  matters  against  the  will  of  even  one  dis- 
senting partner.  Thus,  the  majority  can  not  alter  the  prin- 
ciple upon  which  profits  are  to  be  dealt  with,82  or  engage  the 
linn  in  a  different  business,83  or,  generally,  make  any  change 
in  matters  provided  for  by  the  articles  of  partnership.84 
Even  a  provision  in  the  articles  of  partnership  that  the  ma- 
jority should  govern  is  construed  not  to  authorize  radical 
changes  of  the  character  under  consideration.85 


Division  of  Profits. 

gg.  In  the  absence  of  any  special  contract  on  the  subject, 
the  majority  may  determine  the  time  when  profits 
shall  be  divided,  and  the  amount  to  be  divided. 

ioo.  For  the  purpose  of  periodic  division,  the  excess  of  ordi- 
nary current  receipts  over  ordinary  current  expenses 
may  be  treated  as  profits. 

The  mode  of  ascertaining  profits,  the  times  at  which  profits 
are  to  be  divided,  and  the  amount  to  be  divided  at  any  one 
time,  ought  to  be,  and  usually  are,  fixed  by  the  partnership 
agreement;  but  in  the  absence  of  any  express  or  implied 
agreement  upon  the  subject,  the  matter  may  be  determined  by 

and  not  withheld  by  the  articles  of  partnership,  without  being  lia- 
ble for  losses  which  could  not  be  foreseen."  Markle  v.  Wilbur,  200 
Pa.  457,  50  Atl.  204.     See,  also,  Kirk  v.  Hodgson,  3  Johns.  Ch.  400. 

82  Const  v.  Harris,  Turn.  &  R.  496. 

83  Zabriskie  v.  Hackensack  &  N.  Y.  R.  Co.,  18  N.  J.  Eq.  178.  In 
Natusch  v.  Irving,  2  Coop.  Ch.  358,  Gow,  Partn.  398,  Lindl.  Partn. 
p.  316,  it  was  held  that  the  majority  stockholders  in  a  joint-stock 
fire  and  life  insurance  company  could  not  change  it  into  a  marine 
insurance  company. 

s-t  Livingston  v.  Lynch,  4  Johns.  Ch.   (N.  Y.)   573.     No  change  in 
membership  can  be  so  made.     See  ante,  §  "Delectus  Personarum." 
85  Livingston  v.  Lynch,  4  Johns.  Ch.  (N.  Y.)   373. 


174:  RIGHTS  OF  PARTNERS. 

:,  majority  of  the  partners.86  "Profit  is_lhe_cxcess  of  re- 
ceipts over  expenses,  and  in  winding  up  a  partnership,  noth- 
ing is  properly  divisible  as  profit  which  does  not  answer  this 
description.  But  for  the  purposes  of  business,  and  of  facil- 
itating annual  divisions  of  profits,  a  distinction  is  made  be- 
tween ordinary  and  extraordinary  receipts  and  expenses;  and 
whilsl  all  extraordinary  expenses  are  frequently  defrayed 
..nt  of  capital,  and  out  of  money  raised  by  borrowing,  the  or- 
dinary expenses  are  defrayed  out  of  the  returns  of  the  busi- 
ness, and  the  profits  divisible  in  any  one  year  are  ascertained 
by  comparing  the  ordinary  receipts  with  the  ordinary  expen- 
sea  of  that  year."47  What  losses  and  expenses  ought  to  be 
treated  as  ordinary,  and  therefore  payable  out  of  the  current 
receipts,  and  what  ought  to  be  treated  as  extraordinary,  and 
payable  legitimately  out  of  the  capital  or  money  raised  by 
borrowing,  is,  in  the  absence  of  special  agreement,  a  matter  to 
be  determined  by  the  majority.88 

Expulsion  of  Paetnee. 

ioi.  No  majority  of  the  partners  can  expel  any  partner  un- 
less a  power  to  do  so  has  been  conferred  by  express 
agreement  between  the  partners. 

Where  a  power  of  expulsion  is  conferred,  it  can  only  he  ex- 
ercised in  good  faith,  with  a  view  to  the  benefit  of  the  firm, 
and  not  for  the  private  benefit  of  any  of  the  partners,89  and 

so  Lindl.  Partn.  p.  393.     See,  also,  Kennedy  v.  Kennedy,  3  Dana 
(Ky.)  239;  Wood  v.  Beath,  23  Wis.  254. 

87  Lindl.  Partn.  p.  394. 

as  Lindl.  Partn.  p.  394. 
■  Blisset  v.  Daniel,  10  Hare,  493,  19  Eng.  Rul.  Cas.  516.  The 
power  cannot  be  exercised  merely  to  enable  the  continuing  partners 
to  appropriate  to  themselves  the  share  of  the  expelled  partner  at  a 
fixed  value,  less  than  the  true  value.  Blisset  v.  Daniel,  10  Hare, 
493,  19  Eng.  Rul.  Cas.  517. 


EXPULSION  OF  PARTNER.  1 75 

the  partner  whom  it  is  sought  to  expel  must  have  notice  and 
an  opportunity  of  being  heard.90  If  the  expulsion  is  made 
in  good  faith  in  pursuance  of  an  express  power,  no  reason 
therefor  need  he  assigned  ;91  but  if  cause  be  not  shown,  then  it 
must  be  very  clearly  made  out  that  the  exercise  of  the  power 
has  been  in  good  faith.92  A  power  of  expulsion  will  be  con- 
strued with  very  great  strictness.93  An  attempted  expulsion 
in  violation  of  these  rules  is  simply  void,  and  the  excluded 
partner's  remedy  is  to  claim  reinstatement  in  his  rights  as  a 
partner,  and  not  an  action  for  damages.94  y  V" 


90  Wood  v.  Woad,  L.  R.  9  Exch.  190.  The  power  was  not  properly 
exercised  at  the  exclusive  instance  of  one  partner,  and,  in  conse- 
quence of  his  representation  to  the  other  partners,  made  without 
the  knowledge  and  behind  the  back  of  the  partner  who  was  to  be 
expelled,  and  without  giving  to  such  partner  the  opportunity  of 
stating  his  case,  and  of  removing  any  misunderstanding  on  the  part 
of  his  copartners.  Blisset  v.  Daniel,  10  Hare,  493,  19  Eng.  Rul.  Cas. 
517. 

9i  Russell  v.  Russell,  14  Ch.  Div.  471,  49  L.  J.  Ch.  268,  42  Law 
Times  (N.  S.)  112;  Stuart  v.  Gladstone,  38  Law  Times  (N.  S.)  557; 
Blisset  v.  Daniel,  10  Hare,  539,  19  Eng.  Rul.  Cas.  546.  Where  a  part- 
ner can  be  expelled  only  for  cause,  the  burden  of  proof  is  on  the 
party  asserting  that  a  cause  of  forfeiture  has  arisen.  Patterson  v. 
Silliman,  28  Pa.  304.  Insolvency  would  be  a  sufficient  ground  for  the 
exercise  of  the  power.     Hubbard  v.  Guild,  1  Duer  (N.  Y.)  662. 

92  Blisset  v.  Daniel,  10  Hare,  522,  19  Eng.  Rul.  Cas.  532. 

93  Blisset  v.  Daniel,  10  Hare,  505,  19  Eng.  Rul.  Cas.  527. 

9-*  Wood  v.  Woad,  L.  R.  Exch.  190.  In  Patterson  v.  Silliman,  28 
Pa.  304,  the  partnership  agreement  provided  that  the  party  violating 
its  stipulations  should  forfeit  his  interest,  and  might  be  excluded, 
at  the  option  of  the  other  partner,  from  further  participation  in  the 
business.  The  complainant,  having  been  excluded,  brought  a  bill 
for  dissolution,  sale  of  the  property,  etc.  The  court  held  that  on 
the  facts  proved  he  was  entitled  to  his  prayer;  that  the  burden  of 
proof  was  on  the  party  asserting  that  a  cause  of  forfeiture  had 
arisen,  and  that  the  respondent  in  the  case  at  bar  had  failed  to  sus- 
tain it.  In  Gorman  v.  Russell,  14  Cal.  531,  it  was  held  that  a  vol- 
untary association  for  mutual  relief  in  sickness  and  other  similar 
purposes,  which  was  in  effect  a  partnership,  could  be  dissolved  by 


170  RIGHTS  OF  PARTNERS. 

Partner's  Lien. 

102.  Every  partner  has  the  right  to  have  the  partnej 

property  applied  in  payment  of  the  debts  and  liabilities 
of  the  firm. 

103.  Every  partner  has  a  right  to  have  whatever  may  be 
due  to  the  firm  from  his  copartners,  as  members  there- 
of, deducted  from  what  would  otherwise  be  payable 
to  them  in  the  partnership. 

On  a  dissolution,  every  partner  is  entitled  as  against  the' 
other  partners  and  all  persons  claiming  through  them  in  res- 
pect of  their  interests  as  partners,  to  have  the  property  of  the 
partnership  applied  in  payment  of  the  debts  and  liabilities  of 
the  firm,  and  to  have  the  surplus  assets,  after  such  payment, 
applied  in  payment  of  what  may  be  due  to  the  partners,  re- 
spectively, after  deducting  what  may  be  due  to  the  firm  from 
them  as  partners.95     This  right  is  what  is  known  as  a  "part- 

a  court  of  equity  if  it  improperly  excluded  a  member.     See,  also, 
Berry  v.  Cross,  3  Sandf.  Ch.  (N.  Y.)   1. 

85  West  v.  Skip,  1  Ves.  Sr.  239,  19  Eng.  Rul.  Cas.  618;  Ex  parte 
Ruffin,  6  Ves.  119,  Burdick's  Cases,  192,  19  Eng.  Rul.  Cas.  618. 
Among  the  many  American  cases  recognizing  the  lien  of  partners  on 
partnership  property  are  Donelson's  Adm'rs  v.  Posey,  13  Ala.  752; 
Duryea  v.  Burt,  28  Cal.  569;  Allen  v.  Hawley,  6  Fla.  142;  Pearson 
v.  Keedy,  6  B.  Mon.  (Ky.)  128;  Crooker  v.  Crooker,  46  Me.  250  r 
Freeman  v.  Stewart,  41  Miss.  138;  Hill  v.  Beach,  12  N.  J.  Eq.  31 ; 
Menagh  v.  Whitwell,  52  N.  Y.  146,  Burdick's  Cases,  222;  Lane  v. 
Jones,  9  Lea  (Tenn.)  627;  Case  v.  Beauregard,  99  U.  S.  119,  124; 
Mechem's  Cases,  440;  Standish  v.  Babcock,  52  N.  J.  Eq.  628,  29  Atl. 
327;  Rainey  v.  Nance,  54  111.  29;  Hapgood  v.  Cornwell,  48  111.  64. 
The  lien  attaches  to  partnership  land,  as  well  as  personalty,  regard- 
less of  the  state  of  the  legal  title.  Duryea  v.  Burt,  28  Cal.  569; 
Crooker  v.  Crooker,  46  Me.  250;  Lane  v.  Jones,  9  Lea  (Tenn.)  627. 
See,  also,  Roberts  v.  McCarty,  9  Ind.  16;  Evans  v.  Hawley,  35  Iowa, 
83;  Divine  v.  Mitchum,  4  B.  Mon.  (Ky.)  488;  Arnold  v.  Wainwright, 
6  Minn.  358;   DilWorth  v.  Mayfield,  36  Miss.  40;  Priest  v.  Chouteau, 


PARTNER'S  LIEN. 

ner's  lien."  Tt.  existjg.dnrijpy  the  partnershi 
become  active  until  a  dissolution,  it  until  it  is  sought  to  as 
certain  the  share  of  a  partner.  If  _a_partnership  is  illegal, 
no,  lien  exists.96  This  right  or  lien  is  available  against  a 
partner,  or  any  one  claiming,  through  him,  a  share  in  the 
partnership  assets.07  Thus,  it  is  available  against  the  ex- 
ecutors of  a  deceased,  or  the  trustee  of  a  bankrupt  partner,98 
and  the  assignee  of  a  partner's  share."  But  it  is  not  avail- 
able against  a  purchaser  from  a  partner  of  specific  chattels 
of  the  firm.100 

The  lien  attaches  to  all  the  partnership  assets  at  the  time 
of  dissolution,  or  the  ascertainment  of  a  partner's  share,  and 
to  such  assets  only. 10 1 

The  lien  of  partners  upon  the  surplus  after  the  payment  of 
partnership  debts  extends  to  -whatever  is  due  to  or  from  the 
firm  by  or  to  the  members  thereof,  as  such.  It  does  not  ex- 
tend to  debts  incurred  between  the  firm  and  its  members 
otherwise  than  in  their  character  of  members.102 

JThc  lien  is  lost  by  th^  pm1YPr«ipn  n-f  pMuPr^jp  prpppvtv    <Aa 
into  the  separate  property  of  q  pqT+nor,108  and  of  course,  jt  is      y^TS—W 
lost  as  to  property  validly  *"\A  tn  a  st^M 

85  Mo.  398;  Hiscock  v.  Phelps,  49  N.  Y.  97;  Mendenhall  v.  Benbow, 
84  N.  C.  646;  Digg's  Adm'r  v.  Brown,  78  Va.  292. 

oeEwing  v.  Osbaldiston,  2  Mylne  &  C.  88. 

87  Hoyt  v.  Sprague,  103  U.  S.  613;  Hobbs  v.  McLean,  117  U.  S.  567. 

98  Croft  v.  Pyke,  3  P.  Wms.  180. 

s>9  Cavander  v.  Bulteel,  L.  R.  9  Ch.  79. 

ioo  in  re  Langmead's  Estate,  7  De  Gex,  M.  &  G.  353. 

ioi  Payne  v.  Hornby,  25  Beav.  280;  West  v.  Skip,  1  Ves.  Sr.  239, 
19  Eng.  Rul.  Cas.  618.  A  partner  has  no  lien  upon  his  copartner's 
individual  property  for  a  debt  arising  on  a  partnership  transaction. 
Murphy  v.  Warren,  55  Neb.  215,  75  N.  W.  573. 

io2Lindl.  Partn.  p.  683;  Ryall  v.  Rowles,  1  Ves.  Sr.  348;  Skipp  v. 
Harwood,  2  Swanst.  586,  note.  See,  also,  Uhler  v.  Semple,  20  N.  J. 
Eq.  288;  Ketchem  v.  Durkee,  Hoff.  Ch.  (N.  Y.)  538. 

103  Giddings  v.  Palmer,  107  Mass.  269;  Robertson  v.  Baker,  11  Fla. 
12 


17S  RIGHTS  OF  PARTNERS. 

It  is  a  necessary  consequence  of  the  existence  of  the  part- 
ner's lien,  that  no  partner  has  a  right  to  apply  the  partner- 
ship  property  to  his  own  individual  uses  or  debts,  and  unless 
the  transferee  is  a  bona  fide  holder  for  value,  the  property  so 
transferred  may  be  recovered  for  the  benefit  of  the  firm.104 
Another  consequence  of  the  existence  of  the  partner's  lien  is 
the  priority  of  firm  over  separate  creditors  in  the  distribution 
of  the  firm  property.  This  aspect  of  the  partner's  lien  will 
be  more  fully  treated  in  the  following  chapter.105 

192;  In  re  Langmead's  Estate,  7  De  Gex,  M.  &  G.  353;  Lingen  v. 
Simpson,  1  Sim.  &  S.  600;  Ex  parte  Ruffin,  6  Ves.  119,  Burdick's 
Cases,  192,  19  Eng.  Rule  Cas.  618.  Compare  Holderness  v.  Shackels, 
8  Barn.  &  C.  612.  Where  a  partner  buys  the  interest  of  a  copartner, 
he  takes  the  property  discharged  of  his  copartner's  right  to  have  the 
debts  paid  therefrom.  Ladd  v.  Griswold,  4  Gilm.  (111.)  25;  Cory  v. 
Long,  2  Sweeny  (N.  Y.)  491.  So,  where  a  retiring  partner  sells  his 
interest  to  his  copartner,  and  the  latter  assumes  and  agrees  to  pay 
the  debts,  the  lien  on  the  assets  is  divested,  and  the  personal  obli- 
gation of  the  partner  is  substituted  therefor.  Williamson  v.  Adams, 
16  111.  App.  564;  Ladd  v.  Griswold,  4  Gilm.  (111.)  25;  Parker  v.  Mer- 
ritt,  105  111.  293;  Hapgood  v.  Cornwell,  48  111.  64;  Goembel  v.  Arnett, 
100  111.  34. 

loiJanney  v.  Springer,  78  Iowa,  617,  43  N.  W.  461;  Davies  v.  At- 
kinson, 124  111.  474,  16  N.  E.  899;  Farwell  v.  St.  Paul  Trust  Co.,  45 
Minn.  495,  48  N.  W.  326. 

105  See  post,   §  127  et  seq. 


CHAPTER  IX. 

RIGHTS  AND  LIABILITIES  OP  PARTNERS  AS  TO  THIRD  PER- 
SONS. 

104.  Power  of  Partner  to  Bind  Firm. 

105-106.  Actual  Authority. 

107-108.  Apparent  or  Implied  Authority. 

109-110.  Restrictions  by  Dissent. 

111-112.  Liability  on  Contracts. 

113.  Liability  for  Torts,  Frauds,  Breaches  of  Trust  and  Crimes. 

114-115.  Nature  of  Liability. 

116.  Extent  of  Liability. 

117.  Commencement  of  Liability. 

118.  Termination   of  Liability. 

119.  For  Future  Acts. 
120-121.  Notice  of  Dissolution. 

122.  For  Past  Acts. 

123.  Application  of  Assets  to  Liabilities. 

124.  Application   by  Partners. 
125-126.  Application  by  Court. 
127-128.  Priorities  in  Firm  Property. 
129-132.  Priorities  in  Separate  Property. 


Power  of  Partner  to  Bind  Firm. 


104 

: 


104.     A  partner  may  bind  his  firm  by  acts  which  are  either — 
a)  Within  the\actual  scope\of  his  authority,  or 
(b)  Within  the\apparent  scope\of  his  authority. 

Same — Actual  Authority. 


105.     A  partner's  actual  authority  to  bind  the  firm  is  regu- 
lated by  agreement  between  them. 


[80  AS  TO  THIRD  PERSONS. 

106.     In  the  absence  of  any  special  agreement  upon  the  subr 
ject,  a  partner  has  actual  authority  topmcn^^nrmJMt. 

all  acts  necessary  for  carrying  on  the  partnership  busi- 
ness in  the  usual  way. 


It  has  already  been  seen  that  the  liability  of  partners,  as 
such,  depends  upon  the  principles  of  agency.3  The  basis  of 
the  liability  of  the  members  of  a  firm  is  in  the  fad  that  they 
are  principals  in  any  and  every  transaction;  not  because  they 
are  credited  or  held  oul  .-is  partners.2  Of  course,  any  ad 
done  by  a  partner  within  the  actual  scope  of  the  agency  con- 
ferred  upon  him  is  binding  upon  all  the  partners  as  a  firm.3 
And  a  subsequent  ratification  of  an  ad  is  equivalent  to  an 
antecedent  authority.4  The  actual  authority  of  a  partner  to 
bind  his  copartners  depends  upon  the  agreement  between 
them.  By  express  contract,  they  may  confer  or  withhold 
whatever  authority  they  see  fit,  as  in  the  case  of  any  other 
principal  and  agent.  In  the  absence  of  any  express  contract 
provision  upon  the  subject,  it  will  be  presumed  that  it  was 
intended  that  a  partner  should  have  authority  to  hind  the 
firm  by  all  acts  necessary  for  carrying  on  the  business  in  the 

i  See  ante,  c.  11.  See,  also,  Pooley  v.  Driver,  5  Ch.  Div.  467;  Cox 
v.  Hickman,  8  H.  L.  Cas.  268,  Burdick's  Cases,  65,  Mechem's  Cases,  70. 

-  Wherman  v.  McFarlan,  9  Ohio  Dec.  400.  Dormant  partners,  when 
discovered,  are  made  liable  upon  this  principle.  Brooke  v.  Washing- 
ton, 8  Grat.  (Va.)  248,  56  Am.  Dec.  142.  Where  a  credit  is  given  to 
a  firm  under  such  a  name  as  "A.  &  Co.,"  the  latter  law  presumes  that 
credit  was  given  to  every  one  who  is  actually  a  member,  known  or 
not.  Elmira  Iron  &  Steel  Rolling  Mill  Co.  v.  Harris,  124  N.  Y.  280, 
26  N.  E.  541,  Burdick's  Cases,  398. 

s  Where  a  partner  was  specially  constituted  the  general  agent  of 
the  firm,  and  was  in  the  habit  of  borrowing  money  with  the  knowl- 
edge of  his  copartners,  and  without  objection,  the  firm  would  be  lia- 
ble, under  the  agency,  for  money  borrowed  by  him.  Hoskinson  v. 
Eliot,  62  Pa.  393. 

*  Casey  v.  Carver,  42  111.  225;  Miller  v.  Royal  Flint  Glass  Works,. 
172  Pa.  70,  33  Atl.  350,  Burdick's  Cases,  137. 


POWER  OF  PARTNER  TO  BIND  FIRM.  1S1 

way  such  a  business  is  usually  conducted,  and  a  partner  has 
actual  and  rightful  authority  to  that  extent.5  When  a  part- 
nership is  formed  for  a  particular  purpose,  it  is  in  itself  a 
grant  of  authority  to  the  acting  members  of  the  company  to 
transact  its  business  in  the  usual  way.6 

Notice  to  Partner  is  Notice  to  Firm. 

Notice  to  an  acting  partner  of  any  matter  relating  to  the 
partnership  affairs  operates  as  notice  to  the  firm,  except  in 
the  case  of  a  fraud  upon  the  firm  committed  by  him,  or  with 
his  consent." 

Admissions  and  Representations. 

An  admission  or  representation  made  by  one  partner  con- 
cerning the  partnership  affairs,  and  in  the  ordinary  course 

s  Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  837;  Brooke  v.  Wash- 
ington, 8  Grat.  (Va.)  248,  56  Am.  Dec.  142.  Each  partner  is  the 
agent  of  his  partners  in  all  matters  within  the  scope  of  the  firm  busi- 
ness. Edwards  v.  Tracy,  62  Pa.  374.  Each  partner  is  the  agent  of 
the  partnership  as  to  all  contracts  and  transactions  within  the  scope 
of  the  partnership  business,  as  tested  by  the  nature  of  the  particular 
business  and  its  ordinary  usages.  Alabama  Fertilizer  Co.  v.  Rey- 
nolds, 79  Ala.  497.  A  managing  partner  of  a  mine  has  authority  to 
defray  all  the  necessary  and  proper  expenses  incidental  to  the  bene- 
ficial working  of  the  mine  out  of  the  joint  profits  derived  from  the 
sale  of  the  minerals.  Roberts  v.  Eberhardt,  Kay,  148,  23  L.  J.  Ch 
201,  19  Eng.  Rul.  Cas.  607. 

GHoskinson  v.  Eliot,  62  Pa.  393;  Pooley  v.  Whitmore,  10  Heisu. 
(Tenn.)  634.  "The  acting  partners  are  identified  with  the  company, 
and  have  power  to  conduct  its  business  in  the  usual  way.  This 
power  is  conferred  by  entering  into  the  partnership,  and  is,  per- 
haps, never  to  be  found  in  the  articles."  Winship  v.  Bank  of  U.  S., 
5. Pet.  (U.  S.)  529.  The  principle  that  one  partner  may  bind  the 
firm  applies  as  well  to  partnerships  for  manufacturing  and  me- 
chanical purposes  as  to  those  for  commerce.  Hoskinson  v.  Eliot,  62 
Pa.  393. 

i  Williamson  v.  Barbour,  9  Ch.  Div.  535;  Lacey  v.  Hill,  4  Ch.  Div. 
549;  Howland  v.  Davis,  40  Mich.  546;  Tucker  v.  Cole,  54  Wis.  539, 
11  N.  W.  703;  Gedge  v.  Cromwell,  19  App.  D.  C.  192;  Adams  v.  Ash- 


182  As  T0  THIRD  PERSONS. 

of  its  business,  is  evidence  against  the  firm,s  and  may  be  con- 
clusive liv  way  of  estoppel.  This,  however,  does  not  apply 
to  a  representation  by  one  partner  as  to  his  authority  to  bind 
the  firm,9  nor  probably  as  to  the  extent  and  nature  of  the  busi- 
nesa  "t"  the  firm,  for  the  extent  of  his  authority  depends  upon 
the  nature  of  that  business. 

Acts  beyond  Actual  Authority. 

A  partner  who  exceeds  his  actual  authority,  as  fixed  by 
agreement,  or  implied  in  the  absence  of  special  agreement, 
must  indemnify  his  copartners  against  any  consequent  loss; 
but  it  does  not  follow  that,  all  the  partners  are  not  primarily 
bound  to  a  third  person  who  dealt  with  a  partner,  even 
though  he  exceeds  his  actual  authority,  for  a  principal  is 
liable  for  the  acts  of  his  agent,  not  only  where  they  are  ac- 
tually authorized,  but  also  where  they  are  within  the  appar- 
ent scope  of  the  agent's  authority. 

It  is  important,  therefore,  to  ascertain  what  acts  are  within 
the  apparent  scope  of  a  partner's  authority,  for  his  actual  au- 
thority to  bind  the  firm  will  depend  on  it,  in  the  absence  of 
special  agreement,  and  his  power  to  bind  the  firm  in  the  ab- 
sence of  actual  authority  will  also  depend  upon  it. 

Same — Apparent  or  Implied  Authority. 

107.     A  partner  has  implied  authority  to  do  any  act  neces- 

sary  for  carrying  on  the  firm  business,  in  the  ordinary 
way. 


man,  203  Pa.  536,  53  Atl.  375;  Loeb  v.  Stern,  189  111.  371,  64  N.  E. 
1043. 

s  See  Fergusson  v.  Fyffe,  8  Clark  &  F.  121;  Williams  v.  Lewis,  115 
Ind.  45,  17  N.  E.  262;  Burgan  v.  Lyell,  2  Mich.  102,  Burdick's  Cases, 
312;  Griswold  v.  Haven,  25  N.  Y.  595;  Caris  v.  Nimmons,  92  Mo. 
App.  66. 

i)  Ex  parte  Agace,  2  Cox,  312,  2  Rev.  R.  49. 


POWER  OF  PARTNER  TO  BIND  FIRM.  183 

108.     The  firm  is  bound  by  any  act  within  the  scope  of  a 
partner's  implied  authority  unless — 
Exception — 

(a)  The  act  was  beyond  his  real  authority,  and 

(b)  The    person    rivaling    with    *V>a    partner    Vtad    wr.*^    rfi 

such  fact. 

Prima  facie,  the  acts  of  every  partner  who  does  any  act  for 
carrying  on,  in  the  usual  way,  business  of  the  kind  carried 
on  by  the  firm  of  which  he  is  a  member  binds  the  firm  and 
his  partners.10 

It  is  competent  for  the  partners,  by  agreement  between 
themselves,  to  restrict  the  authority  of  any  one  or  more  of 
them  to  bind  the  firm,  and  if  such  an  agreement  has  been  en- 
tered into,  no  act  done  in  contravention  of  it  is  binding  on  the 
firm  with  respect  to  persons  having  notice  of  the  agreement.11 
But  such  an  agreement  does  not  affect  persons  who  deal  with 

10  See  preceding  section.  See,  also,  Woodruff  v.  Scaife,  83  Ala. 
152.  3  So.  311;  Eastman  v.  Cooper,  15  Pick.  (Mass.)  276;  Irwin  v. 
Williar,  110  U.  S.  499;  Winship  v.  Bank  of  U.  S.,  5  Pet.  (U.  S.)  529; 
Banner  Tobacco  Co.  v.  Jenison,  48  Mich.  459,  12  N.  W.  655;  Brooke  v. 
Washington,  8  Grat.  (Va.)  248,  56  Am.  Dec.  142;  Crane  Co.  v.  Tier- 
ney,  175  111.  79,  51  N.  E.  715;  Pooley  v.  Whitmore,  10  Heisk.  (Tenn.) 
634.  A  partner  may  enter  into  contracts  in  the  ordinary  business  of 
the  firm,  sell  or  pledge  goods,  draw,  negotiate,  indorse,  or  accept  bills 
or  other  negotiable  securities,  and  do  any  other  acts  incident  or  ap- 
propriate to  such  trade.    Hoskinson  v.  Eliot,  62  Pa.  393. 

ii  Brooks- Waterfield  Co.  v.  Carpenter,  21  Ky.  L.  R.  851,  53  S.  W. 
40;  Straus  v.  Kohn,  83  111.  App.  497;  Bromley  v.  Elliot,  38  N.  H.  287; 
Baxter  v.  Rollins,  90  Iowa,  217,  57  N.  W.  838;  Wilson  v.  Richards, 
28  Minn.  337,  9  N.  W.  872;  Bailey  v.  Clark,  6  Pick.  (Mass.)  372.  The 
partner  making  the  contract  is  bound,  but  not  the  other  members  of 
the  firm.  G.  H.  Haulenbeck  Advertising  Agency  v.  November  (City 
Ct.  N.  Y.)  60  N.  Y.  Supp.  573.  "Where  a  note  has  been  made  or  in- 
dorsed by  a  partner  in  violation  of  his  duty  and  authority,  if  the 
holder  who  receives  it  has  been  guilty  of  gross  negligence  in  receiv- 
ing it,  it  will  not  be  binding  in  his  hands  on  the  partnership."  Dear- 
dorf's  Adm'r  v.  Thacher,  78  Mo.  135,  citing  Story,  Partn.  §  130. 


L84  AS  TO  THIRD  PERSONS. 

a  partner  whose  authority  is  thus  restricted,  without  notice  of 
the  agreement,12  unless,  indeed,  they  do  not  know  or  believe 
him  to  be  a  partner;  for  in  thai  case  he  1ms  neither  real  nor, 

so  far  as  they  are  concerned,  apparent  authority  to  hind  the 
firm.13 

A  partner's  implied  or  apparent  authority  to  hind  his  firm 
is  Limited  to  acts  which  are  necessary  for  carrying  on  the 
partnership  business  in  the  way  in  which  such  businesses  are 
usually  carried  on,  and  does  not  extend  to  acts,  which,  how- 
ever urgent,  are  in  this  sense  unusual.1 ' 

e-' Cox  v.  Hickman,  8  H.  L.  Cas.  304,  Mechem's  Cases,  70;  Vance  v. 
Blair,  18  Ohio,  532;  Leavitt  v.  Peck,  3  Conn.  125,  Mechem's  Cases, 
308;  Winship  v.  Bank  of  U.  S.,  5  Pet.  (U.  S.)  529;  Crane  Co.  v.  Tier- 
ney,  175  111.  79,  51  N.  E.  715;  Hotchin  v  Kent,  8  Mich.  526;  Irwin  v. 
Williar,  110  U.  S.  499;  Hoskinson  v.  Eliot,  62  Pa.  393.  Stipulations 
in  articles  of  partnership  are  to  regulate  the  rights  and  conduct  of 
the  partners  as  among  themselves.  The  trading  world  cannot  know 
them,  but  must  trust  to  the  general  powers  of  all  partnerships.  Hos- 
kinson v.  Eliot,  62  Pa.  393.  Although  articles  may  deny  to  one  part- 
ner the  right  to  bind  the  firm  by  his  separate  act,  within  the  scope 
of  its  business,  he  has  the  power,  for  the  world  cannot  know  and 
are  not  to  be  affected  by  such  limitations.  Edwards  v.  Tracy,  62  Pa. 
374. 

"Nicholson  v.  Ricketts,  2  El.  &  El.  524;  Holme  v.  Hammond,  L. 
R.  7  Exch.  233. 

i*  Hawtayne  v.  Bourne,  7  Mees.  &  W.  595;  Simpsop's  Claim,  36 
Ch.  Div.  532;  Woodruff  v.  Scaife,  83  Ala.  152,  3  So.  3ll;  Brettel  v. 
Williams,  4  Exch.  630;  Berry  v.  Folkes,  60  Miss.  576;  Cotzhausen  v. 
Judd,  43  Wis.  213;  Barnard  v.  Lapeer  &  P.  H.  Plank  Road  Co.,  6  Mich. 
274.  What  is  necessary  to  carry  on  the  business  in  the  ordinary  way 
is  the  test  of  authority  when  no  actual  authority  or  ratification  can 
be  proved.  Pooley  v.  Whitmore,  10  Heisk.  (Tenn.)  634.  "Where,  by 
the  agreement  of  the  parties,  the  management  and  control  of  a  busi- 
ness association  are  given  to  one  of  its  members,  and  the  nature  and 
character  of  the  business  necessarily  involve  varied  duties  and  re- 
sponsibilities, the  parties  to  such  agreement  will  be  held  to  have  im- 
pliedly given  to  the  managing  member,  where  nothing  appears  to 
the  contrary,  the  requisite  power  and  authority  to  discharge  such  du- 
ties and  obligations  in  the  ordinary  and  usual  course  of  business." 
Morse  v.  Richmond,  97  111.  310. 


POWER  OF  PARTNER  TO  BIND  FIRM.  185 

If  a  partner  does  an  net  for  a  purpose  apparently  not  con- 
nected with  the  firm's  ordinary  course  of  business,  he  is  not 
acting  in  pursuance  of  any  apparent  authority,  and  the  firm 
will  not.  be  bound  unless  the  partner  in  fact  had  authority.15 
If,  for  instance,  a  partner  pledges  the  credit  of  the  firm  for  a 
purpose  apparently  not  connected  with  its  ordinary  course  of 
business,  e.  g\,  for  the  purpose,  to  the  knowledge  of  the  cred- 
itor, of  paying  his  private  debts,10  the  firm  is  not  bound  un- 
less he  is  in  fact  specially  authorized  by  the  other  partners.1' 
The  onus  of  proving  such  authority  is  on  the  creditor,  and  it 
is  not  sufficient  for  him  to  prove  that  he  honestly  believed 
there  was  such  authority,18  unless  the  other  partners  arc, 
by  their  conduct,  estopped  from  denying  the  authority.19 

Particular  Powers. 

Whether  or  not  any  particular  act  is  necessary  to  the  trans- 
action of  a  business  in  the  way  it  is  usually  carried  on  is  a 
■question  to  be  determined  by  the  nature  of  the  business,  and 
by  the  practice  of  persons  engaged  in  it.  This  must  once 
have  been  in  all  cases,  as  it  still  would  be  in  a  new  case,  a 
puestion  of  fact.20     But  as  to  a  certain  number  of  frequent 

is  Livingston  v.  Roosevelt,  4  Johns.  (N.  Y.)  251;  Brooks-Waterfield 
Co.  v.  Jackson,  21  Ky.  L.  R.  854,  53  S.  W.  41;  Standard  Wagon  Co.  v. 
Few,  119  Ga.  293,  46  S.  E.  109. 

I'-Leverson  v.  Lane,  13  C.  B.  (N.  S.)  278;  In  re  Riches,  4  De  Gex, 
J.  &  S.  581;    Snaith  v.  Burridge,  4  Taunt.  684. 

i"  A  partner  cannot  pledge  partnership  goods  to  secure  the  pay- 
ment of  advances  made  to  buy  goods  in  the  name  of  another  firm,  of 
which  he  was  a  member.  Brooks-Waterfield  Co.  v.  Carpenter,  21  Ky. 
L.  R.  851,  53  S.  W.  40. 

is  Kendal  v.  Wood,  L.  R.  6  Exch.  243. 

i9  Kendal  v.  Wood,  L.  R.  6  Exch.  243. 

20  Whether  partners  are  engaged  in  business  as  merchants  on  their 
own  account,  or  are  selling  on  commission  for  others,  is  a  question 
of  fact,  and  is  to  be  determined,  not  by  any  privae  agreement  be- 
tween themselves,  but  by  the  nature  of  the  business  actually  done 
by  them  with  the  public.     Alabama  Fertilizer  Co.  v.  Reynolds,   79 


IS.;  AS  TO  THIRD  PERSONS. 

and  important  transactions,  there  arc  well-understood  usuages 
extending  to  all  trade  partnerships,  and  constantly  recognized 
by  the  courts.  These  have  become,  in  effect,  rules  of  law.2' 
Bu1  inasmuch  as  an  act  which  is  common  in  carrying  on  one 
kind  of  business  in  the  usual  way  may  not  be  required  for 
carrying  on  business  of  another  kind,  any  general  statement 
vhat  acts  arc  and  what  acts  are  not  within  the  implied 
authority  of  a  partner  mus1  he  applied  with  caution,  and  it 
has  been  -aid  that  no  answer  of  any  value  can  be  given  to  the 
abstract  question:  Can  one  partner  hind  his  copartners  by 
such  and  such  an  act?22     ISTevertheless,  in  the  absence  of  evi- 

Ala.  497.  "Whether  a  particular  act  was  within  the  scope  of  the 
firm  business  is  a  question  of  fact.  Hefferlin  v.  Karlman,  29  Mont. 
139,  74  Pac.  201. 

2i  In  commercial  partnerships,  the  extent  of  a  partner's  power  to 
bind  the  firm  is  a  question  of  law.  Farmer  v.  Bank  of  Wickliffe,  21 
Ky.  L.  R.  425,  51  S.  W.  586.  In  the  case  of  commission  merchants, 
engaged  only  in  the  business  of  selling  on  commission  for  others, 
purchases  on  their  own  account  being  outside  of  the  scope  of  that 
business,  one  partner  cannot  bind  the  other  by  a  purchase  on  credit 
in  the  partnership  name.  Alabama  Fertilizer  Co.  v.  Reynolds,  79 
Ala.  497.  It  is  within  the  implied  authority  of  a  member  of  a  firm 
engaged  in  manufacturing  and  selling  paper  to  purchase  paper  to  fill 
an  emergency  order.  Buckley  v.  Wood,  9  Kulp  (Pa.)  189.  A  partner 
in  a  firm  formed  to  cultivate  the  lands  of  one  of  the  partners  has  no 
implied  power  to  sell  the  live  stock  and  farming  utensils  of  the  firm 
without  the  consent  of  the  copartner.  Rutherford  v.  McDonnell,  66 
Ark.  448,  51  S.  W.  1060. 

22  "The  question  whether  a  given  act  can  or  cannot  be  necessary 
to  the  transaction  of  the  business  in  the  way  it  is  usually  carried 
on  must  evidently  be  determined  by  the  nature  of  the  business,  and 
by  the  practice  of  persons  engaged  in  it.  Evidence  on  both  these 
points  is  necessarily  admissible,  and,  as  readily  may  be  conceived, 
an  act  which  is  necessary  for  the  prosecution  of  one  kind  of  business 
may  be  wholly  unnecessary  for  the  carrying  on  of  another  in  the 
ordinary  way,  consequently  no  answer  of  any  value  can  be  given  to 
the  abstract  question,  Can  one  partner  bind  his  firm  by  such  an  act? 
Unless  having  regard  to  what  is  usual  in  business,  it  can  be  predi- 
cated of  the  act  in  question,  either  that  it  is  one  without  which  no 
business  can  be  carried  on,  or  that  it  is  one  which  is  not  necessary 


POWER  OF  PARTNER  TO  BIND  FIRM.  1ST 

dence  of  a  usage  in  the  kind  of  business  in  question  to  the 
contrary,  it  seems  that  a  partner  has  impjjed  or  ar/ojiient  au- 
thority to  do  the  following  acts  ou  behalf  of  his  firm,  viz. : 
Receive  payment  and  give  receipts  for  debts  dnp..to.IuA-&im.v2,3 
and^  (probably)  retain  an  attorney  to  conduct  .an  action  io  re-  Jj_ 
cover  such  debts;2'3  assign  choses  in  action;25  draw  cheques, 
not  postdated,2^  on  the,  bankers  of  the_  firm1  in,,  \j\f(l  firm--  (cLy 
name;27  make  contracts  in  reference  to  the  business  of  the 
firm;2S    insure   firm  property;29   purchase,   mi   credit   of  the 

for  the  carrying  on  any  business,  whatever.  There  are  obviously 
very  few  acts  of  which  such  an  affirmation  can  be  truly  made.  The 
great  majority  of  acts  which  give  rise  to  doubt  are  those  which  are 
necessary  in  one  business,  and  not  in  another.  Take,  for  example, 
negotiable  instruments.  It  may  be  necessary  for  one  member  of  a 
firm  of  bankers  to  draw,  accept,  or  indorse  a  bill  of  exchange  on  be- 
half of  the  Arm,  and  to  require  that  each  member  should  put  his 
name  to  it  would  be  ridiculous;  but  it  by  no  means  follows,  nor  is 
it  in  fact  true,  that  there  is  any  necessity  for  one  of  several  solicitors 
to  possess  a  similar  power,  for  it  is  no  part  of  the  ordinary  business 
of  a  solicitor  to  draw,  accept,  or  indorse  bills  of  exchange.  The  ques- 
tion, therefore,  Can  one  partner  bind  the  firm  by  accepting  bills  in 
its  name?  admits  of  no  general  answer.  The  nature  of  the  business 
and  the  practice  of  those  who  carry  it  on  (usage  or  custom  of  trade) 
must  be  known  before  any  answer  can  be  given."  Pooley  v.  Whit- 
more,  10  Heisk  (Tenn.)   635. 

23  Stead  v.  Salt,  3  Bing.  103,  28  Rev.  R.  603;  Porter  v.  Taylor,  6 
Maule  &  S.  156,  18  R.  R.  338;  Steele  v.  First  Nat.  Bank,  60  111.  23; 
Vanderburg  v.  Bassett,  4  Minn.  242;  Wyckoff  v.  Anthony,  9  Daly 
(N.  Y.)  417;  Heartt  v.  Walsh,  75  111.  200;  Major  v.  Hawkes,  12  111. 
298;  Allen  v.  Farrington,  2  Sneed   (Tenn.)   526. 

24  Court  v.  Berlin  [1897]  2  Q.  B.  396. 

-•-Ellison  v.   Stuart,   2   Pen.    (Del.)    179,   43  Atl.   837;    Sullivan  v. 
Visconti,  68  N.  J.  Law,  543,  53  Atl.  598. 
2fi  Forster  v.  Mackreth,  L.  R.  2  Exch.  163. 

27  Laws  v.  Rand,  3  C.  B.  (N.  S.)  442. 

28  Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  837;  First  Nat.  Bank 
v.  Rowley,  92  Iowa,  530,  61  N.  W.  195;  Davis  v.  Dodson,  95  Ga.  718, 
22  S.  E.  645,  Burdick's  Cases,  338. 

20  Hillock  v.  Traders'  Ins.  Co.,  54  Mich.  531,  20  N.  W.  571;  Osgood 
v.  Glover,  7  Daly  (N.  Y.)   367;   McGrath  v.  Home  Ins.  Co.,  88  App. 


1S8  AS  TO  THIRD  PERSONS. 

firm,  gnods  required  for  carrying  on  its  business  in  the  usual 
w  :iv  r"  sell  any  of  the  partnership  goods  ;31  transfer  fira}  prop- 
erty  in  paymenl  of  firm  debts:32  and  engage  servants  ot 
[s  fur  tin1  partnership  business.33 
\  sharp  distinction  is  to  be  noted  as  to  the  apparenl  power 
of  partners  lift  ween  trading  and  non-trading  partnerships. 
lf_thc  partnership  is  an  ordinary  trading  partnership,  a  part- 

Div.  153,  84  N.  Y.  Supp.  374;  Peoria  Marine  &  Fire  Ins.  Co.  v.  Hall, 
:-2  .Midi.  202. 

80  Bond  v.  Gibson,  1  Camp.  185,  Burdick's  Cases,  311,  10  Rev.  R. 
665;  Gardiner  v.  Childs,  8  Car.  &  P.  345;  Irwin  v.  Williar,  110  U.  S. 
499;  Venable  v.  Levick,  2  Head  (Tenn.)  351;  McPherson  v.  Bristol, 
122  .Mich.  354,  81  N.  W.  254;  Crane  Co.  v.  Tierney,  175  111.  79,  51  N. 
E.  715;  McDonald  v.  Fairbanks,  161  111.  124,  43  N.  E.  783;  Stecker  v. 
Smith,  46  Mich.  14,  8  N.  W.  583;  Cameron  v.  Blackman,  39  Mich. 
108;  Chappie  v.  Davis,  10  Ind.  App.  404. 

"i  Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  837;  Simonton  v. 
Sibley,  122  U.  S.  220;  Hudson  v.  McKenzie,  1  E.  D.  Smith  (N.  Y.) 
358;  Christ  v.  Firestone  (Pa.  Sup.)  11  Atl.  395;  Graser  v.  Stellwagen, 
25  N.  Y.  315;  Bender  v.  Hemstreet,  12  Misc.  620,  34  N.  Y.  Supp.  423; 
Sloan  v.  Moore,  37  Pa.  217;  Lambert's  Case,  Godb.  244,  Burdick's 
Cases,  210;  Dore  v.  Wilkinson,  2  Starkie,  287.  A  bill  by  one  claiming 
to  be  a  partner,  to  obtain  conveyance  of  an  interest  in  land  claimed 
to  be  partnership  land,  which  alleges  that  the  partnership  was 
formed  for  the  purpose  of  buying  and  selling  land,  does  not  state  a 
cause  of  action  against  a  vendee  of  one  of  the  alleged  partners, 
since,  if  the  vendor  was  a  partner,  he  had  authority  to  sell  the  land. 
Young  v.  Wheeler,  34  Fed.  Rep.  98.  As  to  a  sale  of  all  the  partner- 
ship property,  see  Freeman  v.  Abramson,  30  Misc.  101,  61  N.  Y.  Supp. 
839;  Lowman  v.  Sheets,  124  Ind.  417,  24  N.  E.  351,  Mechem's  Cases, 
300.  Where  the  partnership  was  for  the  cultivation  of  the  land  of 
one  partner,  the  other  partner  has  no  implied  authority  to  sell  the 
livestock  and  farming  utensils  of  the  firm.  Rutherford  v.  McConnell, 
C6  Ark.  448,  51  S.  W.  1060. 

32  Van  Brunt  v.  Applegate,  44  N.  Y.  544.  See,  also,  Hanchett  v. 
Gardner,  138  111.  571,  28  N.  E.  788;  Janney  v.  Springer,  78  Iowa,  617, 
43  X.  W.  461. 

--Beckham  v.  Drake,  9  Mees.  &  W.  79;  Donaldson  v.  Williams,  1 
Cromp.  &  M.  345;  Weaver  v.  Tapscott,  9  Leigh  (Va.)  424;  Brooke  v. 
Washington,  8  Grat.  (Va.)  248,  56  Am.  Dec.  142;  Sweeney  v.  Neely, 
53  Mich.  421,  19  N.  W.  127;  Mead  v.  Shepard,  54  Barb.   (N.  Y.)  474; 


POWER  OF  PARTNER  TO  BIND  FIRM.  ISO 

ner  has  implied  authority  to  draw,  accept,  make,  and  indorse 
bills  of  exchange,  and  pro™issoffi,,^°tes,  in  the  name  of  the 
firm.34  But  a  member  of  a  firm  of  mining  adventurers  ;35 
quarry  workers;36  farmers;37  planters,38  millers,39  attorneys, 
solicitors,  and  counselors  at  law,40  physicians  and  surgeons,44 
or  a  partner  in  establishing  and  carrying  on  water  works,42 
or  gas  works,43  in  publishing,44  in  sugar  refining,45  in  keep- 

Barcroft  v.  Haworth,  29  Iowa,  462.  Compare  Straus  v.  Kohn,  83  111. 
App.  497;   Palliser  v.  Erhardt,  46  App.  Div.  222,  61  N.  Y.  Supp.  191. 

s*  In  re  Riches,  De  Gex,  J.  &  S.  581;  Stephens  v.  Reynolds,  5  Hurl. 
&  N.  513;  Pooley  v.  Whitmore,  10  Heisk.  (Tenn.)  636;  Palmer  v. 
Scott,  68  Ala.  380;  Wagner  v.  Simmons,  61  Ala.  143.  "In  commercial 
partnerships,  a  note  executed  by  one  member  in  the  firm  name,  is 
prima  facie  the  obligation  of  the  firm,  and  if  one  of  the  parties  seeks 
to  avoid  its  payment,  the  burden  of  proof  lies  upon  him  to  show  that 
the  note  was  given  in  a  matter  not  relating  to  the  partnership  busi- 
ness, and  that,  also,  with  the  knowledge  of  the  holder  of  the  note." 
Lee  v.  First  Nat.  Bank,  45  Kan.  9,  citing  Deitz  v.  Regnier,  27  Kan. 
94.  To  the  same  effect  is  Third  Nat.  Bank  v.  Snyder,  10  Mo.  App. 
App.  213.  The  taker  of  a  promissory  note  or  bill  of  exchange  of  a 
trading  partnership  may  lawfully  presume  that  it  was  given  in  a 
partnership  transaction.  Stevens  v.  McLachlan,  120  Mich.  285,  79 
N.  W.  627. 

35  Dickinson  v.  Valpy,  10  Barn.  &  C.  128;  Ricketts  v.  Bennett,  4 
C.  B.  686;  Bult  v.  Morrell,  12  Adol.  &  El.  745. 

3c  Thicknesse  v.  Bromilow,  2  Cromp.  &  J.  425. 

3T  Greenslade  v.  Dower,  7  Barn.  &  C.  635,  31  Rev.  R.  272;  Ulery  v. 
Ginrich,  57  111.  531. 

ss  Prince  v.  Crawford,  50  Miss.  344;  Benton  v.  Roberts,  4  La.  Ann. 
216. 

30  Graves  v.  Kellenberger,  51  Ind.  66;  Lanier  v.  McCabe,  2  Fla.  32. 

■*oHedley  v.  Bainbridge,  3  Adol.  &  E.  (N.  S.)  316;  Levy  v.  Pyne, 
Car.  &  M.  453;  Friend  v.  Daryee,  17  Fla.  116;  Smith  v.  Sloan,  37  Wis. 
285;   Breckinridge  v.  Shrieve,  4  Dana  (Ky.)  375. 

4i  Crosthwaite  v.  Ross,  1  Hump.  (Tenn.)  23;  Lewis  v.  Reilly,  1 
Q.  B.  349. 

*-  Broughton  v.  Manchester  &  Salford  Waterworks  Co.,  3  Barn.  & 
Aid.  1. 

•*3  Bramah  v.  Roberts,  3  Bing.  N.  C.  963. 

44  Pooley  v.  Whitmore,  10  Heisk.   (Tenn.)  629. 

45  Livingston  v.  Roosevelt,  4  Johns.  (N.  Y.)  251. 


190  AS  TO  THIRD  PERSONS. 

ing  a  tavern,46  in  owning  a  ship,47  in  digging  tunnels,48  in 
carrying  en  a  laundry,49  in  keeping  a  store  and  rope-walk,50 
or  in  any  other  nontrading  firm,61  lias  no  such  implied  au- 
thority. So,  a  member  of  a  trading  partnership  may  borrow 
money  on  the  credit  of  the  firm,52  and  for  that  purpose  pledge 

*«  Cocke  v.  Branch  Bank  at  Mobile,  3  Ala.  175. 
«7  Williams  v.  Thomas,  6  Esp.  18. 

48  Gray  v.  Ward,  18  111.  32. 

49  Neale  v.  Turton,  4  Bing.  149. 

•"Wagnon  v.  Clay,  1  A.  K.  Marsh.  (Ky.)  257. 

5i  Smith  v.  Sloan,  37  Wis.  285;  Third  Nat.  Bank  v.  Snyder,  10  Mo. 
App.  216;  Deardorf's  Adm'r  v.  Thacher,  78  Mo.  128;  Pooley  v.  Whit- 
more,  10  Heisk.  (Tenn.)  636.  "In  partnerships  of  occupation,  when 
one  member  executes  a  note  in  the  firm  name,  the  holder  must  show 
express  or  implied  authority  from  the  firm  to  make  the  note,  before 
a  recovery  can  be  had."  Lee  v.  First  Nat.  Bank,  45  Kan.  8,  25  Pac. 
196,  citing  Smith  v.  Sloan,  37  Wis.  285;  Judge  v.  Braswell,  13  Bush 
(Ky.)  67;  Horn  v.  Newton  City  Bank,  32  Kan.  518,  4  Pac.  1022.  In 
the  absence  of  evidence  of  a  custom  or  usage  among  coffee  brokers 
showing  that  a  firm  of  such  brokers  is  a  trading  partnership,  it  can- 
not be  held  that  negotiable  paper  signed  in  the  name  of  the  firm  by 
one  member  thereof,  without  the  other's  consent,  and  not  used  in  the 
firm  business,  is  good  in  the  hands  of  an  innocent  holder  for  value. 
Third  Nat.  Bank  v.  Snyder,  10  Mo.  App.  211.  "Partners  engaged  'in 
trade'  have  an  authority,  implied  by  law  to  bind  each  other  by  com- 
mercial paper  executed  in  the  firm  name.  Partners  in  other  business, 
such  as  farming,  mining,  etc.,  have  prima  facie  no  such  authority; 
but  this  presumption  against  lack  of  authority  may  be  rebutted  by 
showing  that  the  organization  and  particular  purposes  of  the  firm 
are  such  as  to  render  it  in  the  special  instance  necessary,  or  if  not 
necessary,  usual  in  similar  cases."  Deardorf's  Adm'r  v.  Thacher,  78 
Mo.  131. 

52  Palmer  v.  Scott,  68  Ala.  380;  Wagner  v.  Simmons,  61  Ala.  146; 
Harris  County  v.  Donaldson,  20  Tex.  Civ.  App.  9;  Pahlman  v.  Taylor, 
75  111.  629;  Church  v.  Sparrow,  5  Wend.  (N.  Y.)  223;  Sherwood  v. 
Snow,  46  Iowa,  481;  Lane  v.  Williams,  2  Vern.  292,  Burdick's  Cases, 
488;  Bank  of  Australasia  v.  Breillat,  6  Moore,  P.  C.  152.  It  is  within 
the  power  of  a  partner  in  the  mercantile  business  to  borrow  money 
in  the  name  of  the  firm,  and  to  bind  the  firm  by  an  agreement  to  pay 
interest  on  the  same  at  any  lawful  rate,  and  to  sign  the  firm  name, 
to  any  writing  admitting  the  fact  of  borrowing  and  promising  to 
pay,  and  thereby  furnish  evidence  against  the  firm  and  each  of  its 


POWER  OF  PARTNER  TO  BIND  FIRM.  101 

the  personal  property  of  the  firm,53  and  (probably)  make  an 
equitable  mortgage  by  deposit  of  deeds  or  otherwise  of  its  real 
or  leasehold  property.54 

A  partner  has  no  implied  authority  to  bind  his  firm  by  a 
submission  to  arbitration;55  to  bind  his  firm  by  deed,  even 
though  the  partnersnip  be  constituted  by  deed ,  b  to  make  an 

members.  Walsh  v.  Lennon,  98  111.  27.  In  contracts  as  to  negotiable 
paper,  there  is  no  distinction  between  a  general  and  a  special  part- 
nership, and  the  partnership  is  liable  for  money  borrowed  by  one 
partner  on  the  credit  of  the  firm  within  the  scope  of  its  business. 
Hoskinson  v.  Eliot,  62  Pa.  393.  A  partnership  in  the  business  of  buy- 
ing and  selling  cattle  is  a  trading  partnership,  one  of  the  incidents 
of  which  is  the  right  to  borrow  money  for  the  purposes  of  the  busi- 
ness.    Smith  v.  Collins,  115  Mass.  388. 

53  Ex  parte  Bonbonus,  8  Ves.  540;  Butchart  v.  Dresser,  10  Hare, 
453,  4  De  Gex,  M.  &  G.  542;  Richardson  v.  Lester,  83  111.  55;  Buett- 
ner  v.  Steinbrecher,  91  Iowa,  588,  60  N.  W.  177;  Woodruff  v.  King, 
47  Wis.  261,  2  N.  W.  452. 

64  Lindl.  Partn.  p.  152.     And  see  In  re  Clough,  31  Ch.  Div.  324. 

55  Stead  v.  Salt,  3  Bing.  101,  28  Rev.  R.  602;  Adams  v.  Bankart,  1 
Cromp.,  M.  &  R.  681;  Buchanan  v.  Curry,  19  Johns.  (N.  Y.)  137; 
Buchoz  v.  Grandjean,  1  Mich.  367.  But  see  Hallack  v.  March,  25  111. 
48.  See,  also,  Davis  v.  Berger,  54  Mich.  652,  20  N.  W.  629;  Gay  v. 
Waltman,  89  Pa.  453. 

se  Harrison  v.  Jackson,  7  Term  R.  207,  Burdick's  Cases,  343,  4  Rev. 
R  422;  Steiglitz  v.  Egginton,  Holt,  N.  P.  141;  Gibson  v.  Warden,  14 
Wall.  (U.  S.)  244;  Mackay  v.  Bloodgood,  9  Johns.  (N.  Y.)  285;  Walsh 
v.  Lennon,  98  111.  27.  A  release  under  seal  executed  by  one  partner 
is  an  exception  to  this  rule  and  is  binding  upon  the  firm.  Dyer  v. 
Sutherland,  75  111.  583;  Gillilan  v.  Sun  Mut.  Ins.  Co.,  41  N.  Y.  376. 
A  partner  constituted  by  articles  "the  agent,  and  to  have  the  general 
supervision"  of  the  business  of  the  firm,  is  not  therefore  authorized 
to  bind  the  firm  by  a  note  under  seal.  A  partner  cannot  bind  the 
firm  by  deed;  a  specialty  executed  by  him  in  the  name  of  the  firm 
binds  himself  only.  Hoskinson  v.  Eliot,  62  Pa.  393.  "There  are  many 
respectable  authorities  to  the  position  that,  while  one  partner  cannot 
bind  his  copartners  by  deed,  yet,  if  the  instrument  used  in  commer- 
cial transactions  be  valid  and  effective  without  a  seal,  and  within 
the  power  of  a  partner,  the  attempt  to  seal  the  same  in  behalf  of  the 
firm  will  not  vitiate  its  legal  effect  as  an  unsealed  instrument." 
Walsh  v.  Lennon,  98  111.  32,  citing  Pars.  Partn.  (2d  Ed.)  p.  191, 
note  m;   Price  v.  Alexander,  2  G.  Greene   (Iowa)   427;   Lawrence  v. 


192  AS  TO  THIRD  PERSONS. 

assignmenl  for  the  benfil  of  creditors;67  to  confess  judg- 
menl  ::,s  to  mortgage  firm  realty ;59  to  give  a  guaranty  on  be- 
half of  the  firm,80  to  give  accomodataion  paper;61  to  make  his 

Taylor,  5  Hill  (N.  Y.)  107;  Sweetzer  v.  Mead,  5  Mich.  107;  Tapley  v. 
Butterfleld,  1  Mete.  (Mass.)  515,  Burdick's  Cases,  211;  Gibson  v. 
Warden,  14  Wall.  (U.  S.)  247;  and  authorities  collated  in  9  Am. 
Law  Reg.  (N.  S.)  pp.  271,  272.  And  see  Edwards  v.  Dillon,  147  HI. 
14,  35  N.  E.  135. 

57  Pox  v.  Curtis,  176  Pa.  52,  34  Atl.  952;  Wells  v.  March,  30  N.  Y. 
344;  Williams  v.  Frost,  27  Minn.  255,  6  N.  W.  793;  Loeb  v.  Pierpoint, 
58  Iowa,  469,  12  N.  W.  544;  Shattuck  v.  Chandler,  40  Kan.  516,  20 
Pac.  :'i:>.  Mechem's  Cases,  296.  A  managing  partner  has  no  right  to 
make  an  assignment  for  the  benefit  of  creditors.  Cox  v.  Swofford 
Bros.  Dry  Goods  Co.,  2  Ind.  T.  61,  47  S.  W.  303.  But  compare  Claf- 
flin  Co.  v.  Evans,  55  Ohio  St.  183,  45  N.  E.  3. 

ssHall  v.  Lanning,  91  U.  S.  160;  Soper  v.  Fry,  37  Mich.  236;  Hier 
v.  Kaufman,  134  111.  215,  25  N.  E.  517;  North  v.  Mudge,  13  Iowa,  496. 

so  Napier  v.  Catron,  2  Humph.  (Tenn.)  534. 

bo  Brettel  v.  Williams,  4  Exch.  623;  Andrews  v.  Planters'  Bank,  7 
Smedes  &  M.  (Miss.)  192;  Clarke  v.  Wallace,  1  N.  D.  404,  Mechem's 
Cases,  301.  See,  also,  Pooley  v.  Whitmore.  10  Heisk.  (Tenn.)  631. 
He  may  do  so  for  partnership  purposes  within  the  scope  of  the  part- 
nership business.  Wilkins  v.  Pearce,  5  Denio  (N.  Y.)  541;  Jordan 
v.  Miller,  75  Va.  442.  An  agreement  to  save  a  surety  for  a  third  per- 
son harmless  is  outside  of  the  scope  of  the  partnership  business  of 
a  firm  of  attorneys.  Seeberger  v.  Wyman,  108  Iowa,  527,  79  N.  W. 
290. 

';i  Talmage  v.  Millikin,  119  Ala.  40,  24  So.  843.  '"The  giving  of 
accommodation  paper,'  says  Mr.  Parsons,  'is  considered  so  far  out  of 
the  line  of  regular  commercial  business  that,  if  such  paper  be  made 
and  given  by  one  member  of  a  firm,  the  other  party  will  not  be 
holden  to  any  party  chargeable  with  notice  that  it  is  accommodation 
paper,  unless  it  was  made  with  their  consent.'  1  Pars.  Bills,  141. 
And  thus  it  is  said,  'if  it  appears  on  the  face  of  the  bill  that  it  was 
signed  by  a  partnership  as  sureties,  this  will  be  notice  to  any  one 
who  may  take  it  that  it  was  given  out  of  the  course  of  partnership 
business,  and  no  subsequent  holder  can  recover  on  it  without  prov- 
ing the  assent  of  all  the  parties  to  the  signature.'  1  Pars.  Bills,  140. 
The  same  principle  applies  to  all  cases  where  one  indorsed  on  behalf 
of  the  firm  for  third  persons.  For  suretyship  and  accommodation 
indorsements,  say  the  authorities,  are  not  within  the  business  of  a 
partnership.  1  Pars.  Bills,  140."  Pooley  v.  Whitmore,  10  Heisk- 
(Tenn.)   632. 


POWER  OF  PARTNER  TO  BIND  FIRM.  193 

partners  partners  with  other  persons  in  another  business,62  to 
accept  shares,  though  fully  paid  up,  in  a  company  in  satis- 
faction of  a  partnership  debt.03 


Same — Kestriction  by  Dissent. 

109.  Any  act  within  the  apparent,  or  implied  authority  of  a 
nartner  will  not  bind  a  partner  who  has  given  notice 
that  he  dissents  therefrom,  except: — 

Exceptions — 

(a)  Where  the  act  is  one  which  a  majority  may  do,  the 

minority  are  bound,  though  they  dissent. 

(b)  A  partner  cannot,  by  a  dissent,  impose  additional  bur- 

dens or  responsibilities  upon  third  persons. 

no.  A  partner  cannot,  by  dissent,  deprive  a  copartner  of 
powers  expressly  conferred  upon  him  by  the  partner- 
ship articles. 

The  implied  authority  of  a  partner  to  do  certain  acts  or 
make  certain  contracts  may  be  to  some  extent,  revoked  by  his 
copartners,  who  may  thus  escajDe  liability  for  such  acts  or  con- 
tracts.64 If  the  implied  authority  is  only  apparent,  and  not 
actual,  of  course  the  communicated  dissent  of  any  partner  to 
its  exercise  operates  as  notice  of  that  fact,  and,  as  has  been 
seen,  the  firm  is  not  bound  to  one  having  notice  that  the  pro- 
posed act  is  beyond  the  partner's  authority.  If  the  implied 
authority  is  actual,  the  effect  of  notice  of  dissent  depends 
upon  the  nature  of  the  proposed  act.     If  such  act  relates  to 

62  Singleton  v.  Knight,  13  App.  Cas.  788. 

«3  Neiman  v.  Neiman,  43  Ch.  Div.  198.  Cf.  Weikersheim's  Case, 
L.  R.  8  Ch.  831. 

c^Leavitt  v.  Peck,  3  Conn.  124,  Mechem's  Cases,  308;  Knox  v.  Buff- 
ington,  50   Iowa,  320;    Griswold  v.   Waddington,  16  Johns.    (N.   Y.) 
438;  Yeager  v.  Wallace,  57  Pa.  365. 
13 


194  AS  TO  THIRD  PERSONS. 

a  matter  as  to  which  the  majority  have  a  right  to  control,  they 
may  forbid  it,  and  a  third  person  having  notice  of  this  fact 
can  riot  hold  them  liable;86  but  if  the  majority  determine  to 
do  the  act,  the  minority  will  be  bound,  although  they  dis- 
Bent.66  The  powers  of  a  majority  have  been  already  con- 
sidered. ,;T 

With  the  exceptions  mentioned  in  the  above  black-letter 
icxt,  one  of  two  partners  can  always  escape  liability  by  giv- 
ing notice  of  his  dissent  to  the  proposed  act,  because,  as  has 
been  seen,  in  such  a  case  the  partner  who  forbids  a  change  pre- 
vails.68 A  partner  cannot,  by  notice  of  dissent,  impose  ad- 
ditional burdens  or  responsibilities  upon  a  person  who  has 
dealt  with  the  firm.  Thus,  one  partner  cannot,  by  notice, 
take  away  a  debtor's  right  to  pay  either  partner,69  nor  can  he 
forbid  his  partner  to  pay  a  firm  debt.70  A  dissent  may  be 
waived  by  subsequently  accepting  the  benefits  of  the  forbidden 
act,71 

G5  Carr  v.  Hertz,  54  N.  J.  Eq.  127,  33  Atl.  194,  Burdick's  Cases,  356. 

ee  Johnston  v.  Dutton's  Adm'r,  27  Ala.  245,  Mechem's  Cases,  304; 
Nolan  v.  Lovelock,  1  Mont.  224. 

67  See  ante,  §  96  et  seq. 

esLeavitt  v.  Peck,  3  Conn.  125,  Mechem's  Cases,  308;  Wipperman 
v.  Stacy,  80  Wis.  345,  50  N.  W.  336,  Mechem's  Cases,  309;  Monroe  v. 
Conner,  15  Me.  178;  Clements  v.  Norris,  8  Ch.  Div.  129.  But  see 
Wilkins  v.  Pearce,  5  Denio  (N.  Y.)  541;  Johnson  v.  Bernheim,  76 
N.  C.  139.  See,  also,  ante,  §  96,  "Powers  of  Majority."  A  partner  is 
not  liable  for  the  price  of  goods  sold  to  his  copartner  over  his  pro- 
test, and  after  notice  that  he  would  not  be  bound.  Dawson,  Black 
more  &  Co.  v.  Elrod,  20  Ky.  1436. 

sfl  Xoyes  v.  New  Haven,  etc.  R.  Co.,  30  Conn.  1;  Steele  v.  First  Nat. 
Bank,  60  111.  23;  Gillilan  v.  Sun  Mut.  Ins.  Co.,  41  N.  Y.  376. 

70-Mabett  v.  White,  12  N.  Y.  442.  But  see  McGrath  v.  Cowen,  57 
Ohio  St.  385,  49  N.  E.  338. 

Ti  Johnston  v.  Bernheim,  86  N.  C.  339;  Campbell  v.  Bowen,  49  Ga. 
417;  Pearce  v.  Wilkins,  2  N.  Y.  469;  Mason  v.  Partridge,  66  N.  Y. 
633.    But  see  Monroe  v.  Conner,  15  Me.  178. 


LIABILITY  ON  CONTRACTS.  195 


Liability  on  Contracts. 

hi.  All  members  of  a  firm  are  liable  upon  contracts  made 
by  one  partner,  provided  the  following  conditions  con- 
cur, viz.: 

(a)  The  contract  must  be  within  the  scope  of  the  partner's 

express  or  implied  authority. 

(b)  The  other  party  must  not  have  had  notice  of  any  lim- 
itation upon  the  actual  authority  of  the  partner  to 
make  the  contract. 

(c)  The  partner  must  have  acted  as  agent  for  the  firm,  and 

not  as  a  principal  in  the  transaction. 

112.     The  mere  fact  that  the  firm  received  a  benefit  from  a 

partners  act  is  not  sufficient  to  make  it  liable,  if  it 
would  not  otherwise  be  liable.. 

In  General. 

The  liability  of  partners  upon  contracts  made  by  their  co- 
partner, so  far  as  it  depends  upon  the  scope  of  his  actual  or 
implied  authority  and  notice  thereof  by  the  other  party,  has 
already  been  sufficiently  considered  while  treating  of  a  part- 
ner's power  to  bind  the -firm.  One  more  condition  of  liabil- 
ity remains  to  be  considered. 

In  order  that  a  firm  may  be  bound  by  the  acts  of  a  partner 
or  other  agent  acting  within  his  authority,  the  agent  whose 
acts  are  sought  to  be  imputed  to  his  firm  must  have  acted  in 
his  character  of  agent,  and  not  as  principal.  If  he  acted  as 
principal,  and  not  as  agent,  lie  alone  is  liable  for  such  acts.72 
Whether  a  contract  is  entered  into  by  an  agent,  as  such,  or  by 

"When  a  member  of  a  partnership  borrows  money  upon  his  own 
account,  but  representing  that  it  is  to  be  used  in  the  partnership 
business,  the  partnership  is  not  liable  therefor.  To  bind  the  firm, 
the  lender  must  understand  that  he  is  dealing  with  the  firm  through 
the  agency  of  the  partner  negotiating  the  loan.  Ah  Lep  v.  Gong 
Choy,  13  Or.  205,  9  Pac.  483. 


196  AS  TO  THIRD  PERSONS. 

liim  as  a  principal,  is  often,  bu1  not  always,  apparenl  from 
the  form  of  the  contract.73  It  is  a  question  of  faci  dependent 
upon  the  intent,  understanding,  and  agreement  of  the  par- 
ties.74 

Apart  from  any  genera]  rule  of  law  relating  to  the  exc- 
cution  of  deeds  or  negotiable  instruments,  an  act  or  instru- 
ment relating  to  the  business  of  the  firm,  and  done  or  exe- 
cuted in  the  firm  name,  or  in  any  oilier  manner  showing  an 
intention  to  bind  the  firm  by  any  person  thereto  authorized, 
whether  a  partner  or  not,  is  binding  on  the  firm  and  all  the 
partners,  including  secret,  silent,  dormant,  and  nominal  part- 
ner-.7'"' Where  the  connection  of  the  firm  with  the  transac- 
tion was  unknown  or  concealed,  it  may  nevertheless  be  made 

73  Lindl.  Partn.,  p.  176.  The  use  of  the  pronoun  "I"  instead  of 
"we"  in  a  promissory  note  does  not  interfere  with  its  legal  effect  to 
bind  the  firm.    Weirick  v.  Graves,  73  111.  App.  266. 

-i  Tyler  v.  Waddingham,  58  Conn.  375,  20  Atl.  335;  Peterson  v. 
Roach,  32  Ohio  St.  374;  Hoeflinger  v.  Wells,  47  Wis.  628,  3  N.  W.  589. 
Whether  money  lent  to  a  member  of  a  firm  is  advanced  upon  his 
credit  or  upon  that  of  the  firm  of  which  he  is  a  member,  and  whether 
the  individual  check  of  such  person  given  for  the  loan  is  so  far  pay- 
ment thereof  as  to  leave  the  creditor  no  recourse  to  the  firm,  are 
questions  of  fact  dependent  upon  the  intent,  understanding,  and 
agreement  of  the  parties.  Smith  v.  Collins,  115  Mass.  388.  "When 
one  deals  with  a  partner  in  matters  relating  to  the  partnership  busi- 
ness, it  ought  to  be  inferred  that  he  deals  on  the  credit  of  the  part- 
ship,  unless  the  circumstances  prove  that,  though  apprised  of  the 
partnership,  he  meant  to  give  individual  credit.  It  would  be  hard 
to  hold  him  bound  to  prove  that  he  knew  of  the  partnership,  and 
dealt  on  its  credit."  "The  presumption  is  in  the  affirmative;  and 
to  discharge  the  firm  it  ought  to  appear  clearly  that  he  gave  credit 
to  the  individual  alone,  and  intended  to  absolve  the  other  partners. "" 
Brooke  v.  Washington,  8  Grat.  (Va.)  248,  56  Am.  M.  Dec.  145. 

"5  Locke  v.  Lewis,  124  Mass.  1;  Brooke  v.  Washington,  8  Grat. 
(Va.)  248;  Bromley  v.  Elliot,  38  N.  H.  287;  Reid  v.  Hollinshead,  4 
Barn.  &  C.  867;  Ames'  Cas.  29;  Pitkin  v.  Benfer,  50  Kan.  108,  31 
Pac.  695,  Mechem's  Cases,  313;  Winship  v.  Bank  of  U.  S.,  5  Pet. 
(U.  S.)  529;  Cleveland  v.  Woodward,  15  Vt.  302,  Mechem's  Cases,. 
318;   Reynolds  v.  Cleveland,  4  Cow.  (N.  Y.)   282. 


LIABILITY  ON  CONTRACTS.  197 

liable  under  the  rule  of  undisclosed  principal,  and  the  other 
party  has  his  election  to  hold  the  agent  personally  liable,  or 
to  proceed  against  the  firm  as  a  principal.76  The  necessity, 
use,  and  purpose  of  a  firm  name  have  already  been  con- 
sidered.77 

Bills  and  Notes. 

yho.  signature  of  the  firm  name  to  a  bill  of  exchange  or 
promissory  note  is  equivalent  to  the  signature,  by  the  person 
so  signing,  of  the  names  of  all  the  persons  liable  as  partners    /      .-"-' 
in  that  firm,  but  subject  to  the  qualification  that  no  person      ^       \    * 
whose  name  is  not  on  a  bill  or  note  is  liable  to  be  sued  upon 
it.7^ If  two  persons,   A.    and  another,  partnersintraaeT^ 
carry  on  business  in  the  name  of  A.,  and  a  bill  is  accepted  for 
partnership  purposes  by  one  of  them  in  A.'s  name,  both  part- 
ners will  be  liable  thereon.79     And  unless  A.  also  carries  on 
a  separate  business  in  his  own  name,  the  onus  of  proving  that 
a  bill  in  A.'s  name  is  in  fact  the  bill  of  A.,  and  not  of  the  ' 
firm,  appears  to  be  on  the  other  partner.80     If  there  are  two 
firms  with  one  name,  a  member  of  both  firms  is  liable  on  all 
bills  in  the  firm  name,  but  a  member  of  only  one  of  such  firms 
will  not  be  liable  unless  the  person  giving  the  bill  had  author- 

™  Howell  v.  Adams,  68  N.  Y.  314;  McNair  v.  Rewey,  62  Wis.  167, 
22  N.  W.  339;  Morse  v.  Richmond,  97  111.  303;  Clement  v.  British 
American  Assur.  Co.,  141  Mass.  298,  5  N.  E.  847. 

"  See  ante,  c.  5,  "Firm  Name." 

78  English  Bills  of  Exchange  Act  1882,  §§  23,  89;  Faith  v.  Rich- 
mond, 11  Adol.  &  E.  339;  Beebe  v.  Rogers,  3  G.  Greene  (Iowa)  319; 
Drake  v.  Elwyn,  1  Caines  (N.  Y.)  184;  National  Bank  v.  Thomas,  47 
N.  Y.  15;  Gates  v.  Hughes,  44  Wis.  332;  LeRoy  v.  Johnson,  2  Pet. 
(U.  S.)  186. 

79  Stephens  v.  Reynolds,  5  Hurl.  &  N.  513.  See,  also,  Rumsey  v. 
Briggs,  139  N.  Y.  323,  34  N.  E.  929. 

so  See  Yorkshire  Banking  Co.  v.  Beatson,  5  C.  P.  Div.  115,  Bur- 
dick's  Cases,  141;  Bank  of  Rochester  v.  Monteath,  1  Denio  (N.  Y.) 
402;  U.  S.  Bank  v.  Binney,  5  Mason,  189;  Fed.  Cas.  No.  16.791. 


19S  AS  TO  THIRD  PERSONS. 

ity  to  use,  and  did  in  fad  use,  the  name  of  that  firm  of  which 
he  is  a  member.81 

d  Instruments. 
No  person  can  sue  or  be  suc»l  upon  an  indenture  unless  ho 


In-  nanii'il  ;i~  iTpiiriy  thereto.82     If  an  agent  executes  a  deed 
in  his  own   name,  he,  and  he  only,  can  sue  or"  "be  sued  upon 

i  inn.--  hi- 
authority  to  do  so  is  conferred  by  deed.84  It  is  ruled  in 
England  thai  even  if  the  partnership  he  constituted  by  deed 
an  express  authority  under  seal  is  necessary  to  enable  a  part- 
ner to  hind  his  firm  by  deed,85  hut  the  American  doctrine 
seems  to  he  that  actual  authority,  given  in  any  form,  by  the 
other  partners,  is  all  that  is  needful  to  permit  a  partner  to 
bind  the  firm  by  an  instrument  under  seal.85a  The  best  and 
safest  method  of  making  a  partnership  deed  is  for  each  part- 
ner to  sign  it  with  his  individual  name,  and  add  his  seal, 
though  it  seems  that  one  seal  may  be  adopted  as  the  seal  of 
all  the  partners.86 

Reception  of  Benefit  by  Firm. 

If  a  partner  does  an  act  on  his  own  behalf,  or  otherwise,  so 
as  not  to  bind  the  firm,  the  firm  will  not  be  hound  merely  by 

si  Swan  v.  Steele,  7  East,  210,  8  Rev.  R.  618;  Cushing  v.  Smith,  43 
Tex.  261;  Miner  v.  Downer,  19  Vt.  14;  Hastings  Nat.  Bank  v.  Hib- 
bard,  48  Mich.  452,  12  N.  W.  651,  Mechem's  Cases,  322. 

82  Lord  Southampton  v.  Brown,  6  Barn.  &  C.  718,  30  Rev.  R.  511. 

s3Appleton  v.  Binks,  5  East,  148,  7  Rev.  R.  672;  North  Pennsyl- 
vania Coal  Co.'s  Appeal,  45  Pa.  181;  Tom  v.  Goodrich,  2  Johns. 
(N.  Y.)  214. 

s*  Berkeley  v.  Hardy,  5  Barn.  &  C.  355,  29  Rev.  R.  261;  White  v. 
Cuyler,  6  Term  R.  176,  3  Rev.  R.  147. 

85  Harrison  v.  Jackson,  7  Term  R.  207,  Burdick's  Cases,  343,  4 
Rev.  R.  422;  Steiglitz  v.  Egginton,  Holt,  N.  P.  141. 

sea  Edwards  v.  Dillon,  147  111.  14,  35  N.  E.  135.  And  see  Matthies 
v.  Herth,  31  Wash.  665,  72  Pac.  480;  Gordon  v.  Funkhouser,  100  Va. 
675;  Meyer  v.  Michaels   (Neb.),  95  N.  W.  63. 

so  Berkshire  Woolen  Co.  v.  Juillard,  75  N.  Y.  535;  Mechem's  Cases, 


LIABILITY  ON  CONTRACTS.  199 

reason  of  having  obtained  the  benefit  of  that  act.87  Thus,  if 
a  partner,  without  real  or  apparent  authority,  borrows  money, 
the  lender  cannot  recover  this  money  from  the  firm,  al- 
though the  money  may  have  been  applied  for  its  benefit.88 
If,  however,  the  money  so  borrowed  has  been  expended  in  pay- 
ing the  legitimate  debts  of  the  firm,  or  for  any  other  legiti- 
mate purpose  of  the  firm,  the  lender  is  entitled  in  equity  to 
the  repayment  of  so  much  of  the  money  as  he  can  show  to 
have  been  so  applied.89  "This  doctrine  is  founded  partly  on 
the  right  of  the  lender  to  stand  in  equity  in  the  place  of  those 
creditors  whose  claims  have  been  paid  off  by  his  money  and 
partly  on  the  right  of  the  borrowing  partner  to  be  indemni- 
fied by  the  firm  against  liabilities  bona  fide  incurred  by  him 
for  the  legitimate  purpose  of  relieving  the  firm  from  its  debts, 
or  of  carrying  on  its  business."90 

319;  Mackey  v.  Bloodgood,  9  Johns.  (N.  Y.)  285;  Witter  v.  McNiel,  4 
111.  433. 

sTEmly  v.  Lye,  15  East,  7,  13  Rev.  R.  347;  Bevan  v.  Lewis,  1  Sim. 
376,  27  Rev.  R.  205;  Beckhan  v.  Drake,  9  Mees.  &  W.  79;  Wittram  v. 
Van  Wormer,  44  111.  525;  National  Bank  of  Commerce  v.  Meader,  40 
Minn.  325;  Donnally  v.  Ryan,  41  Pa.  306;  Morlitzer  v.  Bernard,  10 
Heisk.  (Tenn.)  361;  Ex  parte  Apsey,  3  Brown  Cli.  265.  But  a  vol- 
tary  acceptance  of  the  benefit  is  a  sufficient  consideration  for  a  prom- 
ise to  pay.     Siegel  v.  Chidsey,  28  Pa.  279. 

ss  National  Bank  v.  Thomas,  47  N.  Y.  15;  Willis  v.  Bremner,  60 
Wis.  622,  19  N.  W.  403;  Smith  v.  Craven,  1  Cromp.  &  J.  500;  Haw- 
tayne  v.  Bourne,  7  Mees.  &  W.  695.  But  see  Reid  v.  Rigby  [1894], 
2  Q.  B.  40.  A  partner  is  not  liable  for  a  loan  made  to  his  copartner 
before  the  firm  was  formed,  and  by  him  put  into  the  firm  as  his  in- 
dividual property.  Brooks-Waterfield  Co.  v.  Carpenter,  21  Ky.  L.  R. 
851,  53  S.  W.  40. 

so  Reid  v.  Rigby  [1894],  2  Q.  B.  40;  Blackburn  Bldg.  Sov.  v.  Cun- 
liffe,  22  Ch.  Div.  61;  Baroness  Wenlock  v.  River  Dee  Co.,  19  Q.  B. 
Div.  155,  36  Ch.  Div.  675,  note;  Ex  parte  Chippendale,  4  De  Gex, 
M.  &  G.  19. 

ooLindl.  Partn.  p.  191. 


ooo  AS  TO  THIRD  PERSONS. 


Liability  for  Torts,  Frauds,,  and  Breaches  of  Trust. 

113.  A  firm  is  liable  for  damage  caused  to  third  persons,  or 
for  penalties  incurred,  by  the  wrongful  act  of  negli- 
gence of  any  partner  acting  in  the  ordinary  course  of 
business  of  the  firm,  to  the  same  extent  as  the  partner 
so  acting. 

A  principal  is  civilly  liable  for  the  tortious  or  fraudulent 
act,  whether  criminal  or  not,01  of  his  agent,  not  only  when  he 
has  previously  authorized  or  subsequently  ratified  the  act,92 
but  even  though  he  has  expressly  forbidden  it,93  if  it  has  been 
committed  by  the  agent  in  the  course  and  as  part  of  his  em- 
ployment.94 

Upon  this  principle,  a  firm  is  liable  for  any  loss  or  injury 
caused  to  any  person  not  a  member  of  the  firm,  or  for  any  pen- 
alty incurred  by  any  wrongful  act  or  omission  of  a  partner, 
acting  in  the  ordinary  course  of  the  business  of  the  firm,  or 
with  the  authority  of  his  copartners.  The  extent  of  the 
firm's  liability  is  the  same  as  that  of  the  partner  so  acting  or 
omitting  to  act95     Thus,  all  the  members  of  a  firm  of  lawyers 

01  Dyer  v.  Munday  [1895],  1  Q.  B.  742.  A  partner  cannot  be  ar- 
rested for  the  fraud  of  his  copartner.  McNeely  v.  Haynes,  76  N.  C. 
122;  Watson  v.  Hinchman,  42  Mich.  27,  3  N.  W.  236. 

92  As  to  the  requisites  of  ratification,  see  Marsh  v.  Joseph  [1897], 
1  Ch.  214;  Wilson  v.  Tumman,  6  Man.  &  G.  236. 

osCollman  v.  Mills  [1897],  1  Q.  B.  396. 

91  Partners  are  liable  for  the  negligence  of  a  servant  acting  in  the 
course  of  his  employment  by  the  firm.  Stables  v.  Eley,  1  Car.  &  P. 
614;  Wood  v.  L'^comb,  23  Wis.  287. 

05  Pollock,  Partn.  art.  23;  Hobbs  v.  Chicago  Packing  &  Provision 
Co.,  98  Ga.  576,  25  S.  E.  584,  Burdick's  Cases,  349;  Peckham  Iron  Co. 
v.  Harper,  41  Ohio  St.  100;  Robinson  v.  Goings,  63  Miss.  500;  Ash- 
worth  v.  Stanwix,  7  Jur.  (N.  S.)  467;  3  El.  &  El.  701;  Mellors  v. 
Shaw,  1  Best  &  S.  437;  Chester  v.  Dickerson,  54  N.  Y.  1,  Mechem's 
Cases,  20;  Lathrop  v.  Adams,  133  Mass.  471;  Stanhope  v.  Swafford, 
80  Iowa,  45,  45  N.  W.  403;  Attorney-General  v.  Stranyforth,  Bunb.  97, 


LIABILITY  FOR  TORTS,  ETC.  201 

•or  doctors  are  liable  for  the  negligent  advice  given  by  one  of 
them  to  a  client  of  the  firm,  or  for  any  damage  caused  by  neg- 
ligence or  want  of  ordinary  skill,96  or  for  the  negligent  driv- 
ing of  a  partnership  coach  by  one  of  the  firm,97  or  for  defam- 
atory statements  made  to  aid  the  firm  business,98  or  for  fraud 
committed  by  one  of  them  in  the  ordinary  conduct  of  their 
business,  although  the  others  do  not  participate  in  the  fraud, 
and  have  no  knowledge  of  it ;"  and,  speaking  generally,  all 
the  partners  are  answerable  for  the  penalties  incurred  by  any 

Burdick's  Cases,  346;  Rolfe  v.  Dudley,  58  Mich.  208,  24  N.  W.  657. 
Compare  Graham  v.  Meyer,  4  Blatchf.  129,  Fed.  Cas.  No.  5,673.  And 
see  Ozborn  v.  Woolworth,  106  Ga.  459,  32  S.  E.  581. 

aeBlyth  v.  Fladgate  [1891],  1  Ch.  337;  Haley  v.  Case,  142  Mass. 
316,  7  N.  E.  877;  Hess  v.  Lowrey,  122  Ind.  225,  23  N.  E.  156,  Mechem's 
Cases,  330;  Hyrne  v.  Erwin,  23  S.  C.  226;  Warner  v.  Griswold,  8 
Wend.  (N.  Y.)   665. 

07  Moreton  v.  Hardern,  4  Barn.  &  C.  223.  See,  also,  Champion  v. 
Bostwick,  18  Wend.   (N.  Y.)    175. 

asHaney  Mfg.  Co.  v.  Perkins,  78  Mich.  1,  43  N.  W.  1073;  Lathrop 
v.  Adams,  133  Mass.  471.  In  Georgia,  under  Civ.  Code,  §  2658,  an 
action  for  slander  will  not  lie  against  a  partnership.  Ozborn  v. 
Woolworth,  106  Ga.  459,  32  S.  E.  581. 

99  Wolf  v.  Mills,  56  111.  360;  Tenney  v.  Foote,  95  111.  99;  Banner  v. 
Schlessinger,  109  Mich.  262,  67  N.  W.  116;  Locke  v.  Stearns,  1  Mete. 
(Mass.)  560;  Castle  v.  Bullard,  23  How.  (U.  S.)  173;  Brundage  v. 
Mellon,  5  N.  D.  72,  63  N.  W.  209;  Chester  v.  Dickerson,  54  N.  Y.  1, 
Mechem's  Cases,  20;  Walker  v.  Anglo-American  Mortgage  &  Trust 
Co.,  72  Hun  (N.  Y.)  334;  Gill  v.  First  Nat.  Bank  (Tex.  Civ.  A^p.) 
47  S.  W.  751;  Brydges  v.  Branfill,  12  Sim.  369.  And  compare  Marsh 
v.  Joseph  [1897],  1  Ch.  214.  But  where  a  partner,  by  fraudulent  rep- 
resentations, induces  a  stranger  to  purchase  the  interest  of  his  co- 
partners, the  copartners  are  not  liable  for  such  representations  un- 
less they  instigate  or  approve  of  them,  or  the  partner  making  such 
representations  acts  as  their  agent  in  making  them.  Schwabacker  v. 
Riddle,  84  111.  517.  By  9  Geo.  IV,  c.  14,  §  6,  a  firm  is  not  liable  for 
the  false  and  fraudulent  representation  as  to  the  character  or  solv- 
ency of  any  person,  unless  the  representation  is  in  writing,  signed 
by  all  the  partners — signature  by  one  partner  in  the  name  of  the 
firm  is  not  sufficient.     Swift  v.  Jewsbury,  L.  R.  9  Q.  B.  301. 


202  A^  T0  THIRD  PERSONS. 

breach  of  a  statute,  e.  g.,  of  the  revenue  laws.100  or  of  the 
poor  law,101  committed  by  one  partner  in  conducting  the 
partnership  business. 

On  the  other  hand,  the  firm  will  not  be  liable  for  the  will- 
ful or  negligent  tort  of  a  partner  outside  the  scope  of  his  au- 
thority, though  to  some  extenl  connected  with  the  business  of 
the  firm.102  Thus  a  firm  lias  been  held  not  liable  for  the 
malicious  prosecution  and  false  imprisonment  by  one  partner 
of  a  person  for  stealing  partnership  property.103  Of  course 
the  other  partners  may  become  liable  if  they  subsequently 
adopt  the  wrongful  act,  and  receive  the  benefit  of  it.104 

Misapplication  of  Money  or  Property  Received  for  or  in  Cus- 
tody of  Finn. 
With  regard  to  the  liability  of  a  firm  for  the  misapplic- 
ation of  money  or  property  by  one  of  its  members,  the  rule  is 
that  (a)  where  one  partner,  acting  with  the  scope  of  his  ap-. 
parent   authority,  receives  the  money  or  property  of  a  third 

100  Attorney-General  v.  Stranyforth,  Bunb.  97,  Burdick's  Cases, 
346;  Stockwell  v.  U.  S.,  13  Wall.  (U.  S.)  531. 

ioi  Davies  v.  Harvey,  L.  R.  9  Q.  B.  433. 

lo-JTitcomb  v.  James,  57  111.  App.  296;  Gwynn  v.  Duffield,  66  Iowa, 
708,  24  N.  W.  523;  Woodling  v.  Knickerbocker,  31  Minn.  268,  17  N. 
W.  479;  Einstman  v.  Black,  14  111.  App.  381;  Grund  v.  Van  Vleck,  69 
111.  478. 

losArbuckle  v.  Taylor,  3  Dow,  160;  Rosenkranz  v.  Barker,  115  111. 
331,  3  N.  E.  93,  Mechem's  Cases,  335;  Kirk  v.  Garrett,  84  Md.  383, 
25  Atl.  1089;  Farrell  v.  Friedlander,  63  Hun,  254,  18  N.  Y.  Supp.  215; 
Marks  v.  Hastings,  101  Ala.  165,  13  So.  297. 

104  Durant  v.  Rogers,  87  111.  508.  A  subsequent  approval  will  not 
render  a  partner  liable  for  a  trespass  by  his  copartner  unless  it  was 
in  the  nature  of  a  taking  available  to  the  firm.  Grund  v.  Van  Vleck, 
69  111.  478. 

A  partnership  is  liable  as  such  in  an  action  for  malicious  prose- 
cution, or  for  malicious  arrest,  where  the  suit  was  instituted,  or  the 
process  sued  out,  in  furtherance  of  the  partnership  interests,  and 
by  direct  authority  of  its  members.  Page  v.  Citizens'  Banking  Co., 
Ill  Ga.  73,  51  L.  R.  A.  463. 


LIABILITY  FOR  TORTS,  ETC.  203 

person^and : misapplies  it;  and_(b)  when  a  firm, jn  the  course 
of  its  business,  receives  money  or  property  of  a  third  person, 
and  the  money  or  property  so  received  is  misapplied  by  one 
or  more  of  the  partners  while  it  is  in  the  custody  of  the  firm, 


..-        .     .  ...... 

-the  firm  is  liable  to  make  good  the  loss. 

In  the  cases  falling  under  the  first  branch  (a)  of  the  ride, 
the  money  is  received  by  the  partner  as  the  real  or  ostensible 
agent  of  the  firm,  and  the  firm  is  therefore,  in  accordance 
with  the  principles  above  explained,  treated  as  having  re- 
ceived it,  and  is  responsible  for  its  proper  application.  If, 
however,  money  has  been  received  by  a  partner  acting  outside 
the  scope  of  his  real  and  apparent  authority,  the  receipt 
thereof  by  the  partner  is  not  a  receipt  by  the  firm,  and  the 
firm  will  not,  without  more,  be  liable  for  the  misapplication 
of  the  money  by  the  partner  who  did  receive  it.105  Thus  it  is 
within  the  ordinary  course  of  the  business  of  solicitors  to  re- 
ceive money  from  clients  for  investment  on  a  specific  security, 
but  it  is  not  within  the  ordinary  course  of  such  business  to 
receive  money  for  investment  generally.  If,  therefore,  a 
member  of  a  firm  of  solicitors  misapplies  money  intrusted  to 
him  by  a  client  for  investment  in  a  particular  mortgage,  his 
partners,  however  innocent,  are  liable  for  such  misapplication,. 
but,  in  the  absence  of  special  circumstances,  they  are  not  lia- 
ble if  the  money  was  received  by  him  for  investment  gen- 
erally.106 

In  order  to  bring  a  case  within  the  second  branch  (b)  of 
the  rule,  the  money  must  have  been  received  by  the  firm  in 

105  willet  v.  Chambers,  Copp.  814;  Whitaker  v.  Brown,  16  Wend. 
(N.  Y.)  504;  Ex  parte  Eyre,  1  Phil.  227;  Adams  v.  Sturges,  55  111. 
468;  Palmer  v.  Scott,  68  Ala.  380;  Guillou  v.  Peterson,  89  Pa.  163; 
Welker  v.  Wallace,  31  Ga.  362;  Todd  v.  Jackson,  75  Ind.  272. 

ioo  Harman  v.  Johnson,  2  El.  &  Bl.  61.  See,  too,  Plumer  v.  Gregory, 
L.  R.  18  Eq.  621.  The  distinction  in  question  is  also  illustrated  by 
the  two  cases  of  Cleather  v.  Twisden,  28  Ch.  Div.  340,  and  Rhodes 
v.  Moules  [1895],  1  Ch.  236. 


2(  i  |  AS  TO  THIRD  PERSONS. 

the  course  of  its  business,  and  have  been  misapplied  while 
still  in  the  custody  of  the  firm.107 

Employment  of  Trust  Money  for  Partnership  Purposes. 

In  order  to  iix  the  other  partners  with  liability  for  a  breach 
of  trust  by  one  partner,  notice  of  the  breach  of  trust  must  be 
brought  home  to  them  individually;  for,  as  a  general  rule  in 
such  eases,  the  money  would  not  have  come  into  the  custody 
of  the  tin  11  in  the  course  of  its  business,  and  the  knowledge 
of  one  partner  would  net  affect  the  others,  for  the  fact  to  bo 
known  would  have  nothing  I"  do  with  the  business  of  the 
firm.  It  is  not  within  the  scope  of  the  implied  authority  of 
a  partner  to  constitute  himself  a  constructive  trustee,  and 
thereby  subject  his  partners  to  liability  in  that  character.108 
It  is  not  sufficient,  in  order  to  fix  innocent  partners  with  lia- 
bility for  the  misapplication  of  money  belonging  to  a  third 
party,  merely  to  show  that  such  moneys  came  into  the  custody 
of  the  firm.109     But  partners  who  are  implicated  in  a  breach 

i";  Thus,  in  Moore  v.  Knight  [1891],  1  Ch.  547,  a  firm  of  solicitors 
received  from  a  client  certain  moneys  for  investment.  The  money 
was  not  invested  but  embezzled.  The  firm  for  many  years  rendered 
accounts  to  their  client  of  the  interest  due  to  her  in  such  form  as  to 
represent  that  the  money  had  been  invested,  and  paid  her  the  inter- 
est. Under  these  circumstances,  the  estate  of  a  deceased  partner, 
who  was  not  party  or  privy  to  the  fraud,  was  held  liable  to  repay 
the  money  with  interest.  See,  also,  Blair  v.  Bromley,  2  Phil.  354; 
Devaynes  v.  Noble,  1  Merivale,  611,  15  Rev.  R.  169;  Clayton's  Case.  1 
Merivale,  572,  15  Rev.  R.  161;  Bishop  v.  Countess  of  Jersey,  2  Drew. 
143. 

los  Bienenstok  v.  Ammidown,  155  N.  Y.  47,  49  N.  B.  321;  Mara  v. 
Browne  [1896],  1  Ch.  199;  Gilruth  v.  Decell,  72  Miss.  232,  Burdick's 
Cases,  351;  Bignold  v.  Waterhouse,  1  Maule  &  S.  255.  See,  also, 
cases  cited  in  following  note. 

i°o  Toof  v.  Duncan,  45  Miss.  48;  Dounce  v.  Parsons,  45  N.  Y.  180; 
Bienenstok  v.  Ammidown,  155  N.  Y.  47,  49  N.  E.  321;  Guillou  v. 
Peterson,  89  Pa.  163;  Englar  v.  Offutt,  70  Md.  78,  16  Atl.  497, 
Mechem's  Cases,  328;  Ex  parte  Apsey,  3  Brown  Ch.  265;   Shaffer  v. 


LIABILITY  FOR  CRIMES.  205 

of  trust  will  be  liable,  though  they  may  not  have  employed 
the  trust  moneys  in  the  partnership  business.110  The  con- 
sideration of  the  circumstances  under  which  persons  who  are 
not  trustees  may  be  liable  for  a  breach  of  trust,  and  under 
which  trust  funds  may  be  followed  and  recovered  from  the 
persons  in  whose  hands  the  funds  are,  belongs  to  the  law  of 
trusts,  and  the  reader  is  referred  to  the  standard  authorities 
on  that  subject.111 

Liability  foe  Crimes. 

113a.  A  partner  is  not  by  reason  of  the  existence  of  the  part- 
nersHip  relation  answerable  criminally  for  the  acts  of 
his  copartners. 

Partners  are  agents  of  each  other  in  respect  of  firm  affairs 
and  their  criminal  liability  for  each  other's  crimes  depends 
on  the  principles  applicable  to  the  law  of  agency. llla  The 
ramifications  of  the  subject  extend  beyond  the  scope  of  the 
present  work  but  it  may  be  stated  as  a  general  rule  that  a  part- 
ner is  liable  only  for  those  crimes  of  his  copartner  which  he 
expressly  or  impliedly  authorizes,  and  the  existence  of  the 
partnership  relation  is  not  an  implied  authorization  to  com- 
mit crimes  for  the  benefit  of  the  firm,  nor  does  ratification  re- 
late back  to  make  the  ratifying  partner  criminally  liable.1110 

Martin,  25  App.  Div.  501,  49  N.  Y.  Supp.  853;  Gilruth  v.  Decell,  72 
Miss.  232,  16  So.  250,  Burdick's  Cases,  351. 

noBlyth  v.  Fladgate  [1891],  1  Ch.  354. 

in  But  see,  generally,  Randall  v.  Knevals,  27  App.  Div.  146,  50 
N.  Y.  Supp.  748. 

ma  Robinson  v.  State,  38  Ark.  641;  Whitton  v.  State,  37  Miss.  379. 

mb  See  Clark  &  M.  Crimes,  395;  Clark  &  S.  Agency,  1138-1142. 
And  see  United  States  v.  Conn,  128  Fed.  615. 


206  A»  TO  THIRD  PERSONS. 


Nature  of  Liability. 

114.  The  liability  of  partners  upon  firm  contracts  is  joint, 
and  not  joint  and  several,  except — 

Exception — 

(a)  Where  the   contract  expressly  imposes  a  joint  and 

several  liability,  jancT 

(b)  Where   statutes   exist   changing  joint   contracts   into_ 

^joint  and  several  contracts. 

115.  The  liability  of  gartners  for  tort^and  breaches  qf  jr,pist 

is  joint  and  several,  except — 

Exception — The  liability  of  partners  in  respect  to  the  own-_ 
ership  of  land  is  joints 

In  the  absence  of  special  circumstances,  the  liability  of 
partners  for  the  debts  and  obligations  of  their  firm  arising  ex 
contractu  is  joint,  and  not  joint  and  several.112  A  partner 
may,  however,  render  himself  separately  liable  by  holding 
himself  out  to  the  creditor  as  the  only  member  of  the  firm,113 
or  by  the  terms  of  the  contract  into  which  he  has  entered.114 

Statutory  Changes. 

In  a  number  of  states,  statutes  have  been  enacted  declaring, 
in  effect,  that  all  contracts  joint  by  the  common  law  should  be 

112  Dob  v.  Halsey,  16  Johns.  (N.  Y.)  34;  Marvin  v.  Wilber,  52  N. 
Y.  270;  Brown  v.  Fitch,  33  N.  J.  Law,  418;  Curtis  v.  Hollingshead, 
16  N.  J.  Law,  402;  Crosby  v  Jeroloman,  37  Ind.  264;  Page  v.  Brant, 
18  111.  37;  Slutts  v.  Chafee,  48  Wis.  617,  4  N.  W.  763;  Mason  v.  El- 
dred,  6  Wall.  (U.  S.)  231,  Burdick's  Cases,  343;  Cox  v.  Gille  Hard- 
ware &  Iron  Co.,  8  Okl.  483,  58  Pac.  645;  Hyde  v.  Casey-Grimshaw 
Marble  Co.,  82  111.  App.  83;  Kendall  v.  Hamilton,  4  App.  Cas.  504. 

us  Bonfield  v.  Smith,  12  Mees.  &  W.  405.  See,  also,  Scarf  v.  Jar- 
dine,  7  App.  Cas.  345. 

i«  Ex  parte  Harding,  12  Ch.  Div.  557. 


EXTENT  OF  LIABILITY.  207 

deemed  joint  and  several.  These  statutes  have  been  generally 
held  applicable  to  partnership  contracts,115  though  in  a  few 
states  it  has  been  held  that  the  liability  of  partners  is  joint, 
notwithstanding  such  statutes.116 

Torts  and  Breach  of  Trust. 

The  liability  of  partners  for  loss  occasioned  by  any  wrong- 
ful act  or  omission,  or  for  the  misapplication  of.  money  or 
property  for  which  the  firm  is  liable,  is  joint  and  several,117 
as  is  also  their  liability  for  any  breach  of  trust  imputable  to 
the  firm.118  "To  this  general  rule,  an  exception  occurs 
where  an  action  ex  delicto  is  brought  against  several  persons 
in  respect  of  their  ownership  in  land,  for  then  they  are  liable 
jointly,  and  not  jointly  and  severally."  119 

Extent  of  Liability. 

116.     Each  partner  is  personally  liable  for  the  entire  amount, 
ofTfl^artnerehjpobj^ 

Exception — In  some  states,  by  statute,  partnership  associa- 
tions may  be  formed  in  which  the  liability  of  some 
or  all  of  the  partners  is  limited. 

Each  individual  partner  is  liable  to  creditors  of  the  firm 
for  the  whole  amount  of  every  debt  due  therefrom,  without 
reference  to  the  proportion  of  his  interest,  or  to  the  nature  of 

us  Williams  v.  Muthersbaugh,  29  Kan.  730;  Hall  v.  Cook,  69  Ala. 
8'< ;  Putnam  v.  Ross,  55  Mo.  116. 

noCoates  v.  Preston,  105  111.  470;  Hyde  v.  Casey-Grimshaw  Marble 
Co.,  82  111.  App.  83;  Currey  v.  Warrington,  5  Har.  (Del.)  147. 

ii"  Linton  v.  Hurley,  14  Gray  (Mass.)  191;  Roberts  v.  Johnson, 
58  N.  Y.  613;  Wood  v.  Luscomb,  23  Wis.  287;  Howe  v.  Shaw,  56  Me. 
291;  Rosenkrans  v.  Barker,  115  111.  331,  3  N.  E.  93,  Mechem's  Cases, 
235;  Stockton  v.  Frey,  4  Gill  (Md.)  406;  In  re  Blackford,  35  App. 
Div.  330,  54  N.  Y.  Supp.  972;  Walker  v.  Anglo-American  Mortgage  & 
Trust  Co.,  72  Hun,  334,  25  N.  Y.  Supp.  432. 

nsBlyth  v.  Fladgate  [1891],  1  Ch.  353;  In  re  Jordan,  2  Fed.  319. 

no  Lindl.  Partn.  p.  198,  citing  1  Wm.  Saund.  291f,  291g. 


208  AS  TO  THIRD  PERSONS. 

the  stipulation  between  him  and  his  associates.120  This  rule 
is  equally  applicable  to  obligations  arising  out  of  torts.121 
"The  law,  ignoring  the  firm  as  anything  distinct  from  the 
members  composing  if,  treats  the  debts  and  engagements  of 
the  firm  as  the  debts  and  engagements  ofthe^  partners,  and 
holds  each  partner  liable  tor  tnein^accordingiv."  122  This 
liability  is,  however,  only  a  liability  insolido  upon  the  judg- 
ment, and  one  partner  cannot  ordinarily  be  sued  alone  upon 
a  firm  debt.122a 

Execution  against  Individual  Properly. 

Tn  the  absence  of  statutory  provision  to  the  contrary,  "if 
judgment  is  obtained  against  the  firm  for  a  debt  owing  by  it, 
the  judgment  creditor  is  under  no  obligation  to  levy  execution 
against  the  property  of  the  firm  before  having  recourse  to  the 
separate  property  of  the  partners  nor  is  he  under  any  obliga- 
tion to  levy  execution  against  all  of  the  partners  ratably ;  but 
he  may  select  any  one  or  more  of  them,-  and  levy  execution 
upon  him  or  them  until  the  judgment  is  satisfied,  leaving  all 
questions  of  contribution  to  be  settled  afterwards  between  the 
partners  themselves."  123 

120 Ellison  v.  Stuart,  2  Pen.  (Del.)  179,  43  Atl.  837;  Brooke  v. 
Washington,  8  Grat.  (Va.)  248,  56  Am.  Dec.  142;  Judd  Oil  Co.  v.  Hub- 
bell,  76  N.  Y.  543,  Mechem's  Cases,  341.  In  Louisiana,  it  is  only  in 
the  case  of  commercial  partnerships  that  each  partner  is  subject  to- 
this  entire  liability.  See  Gumbel  v.  Abrams,  20  La.  Ann.  569;  Payne 
v.  James,  36  La.  Ann.  476. 

121  Loomis  v.  Barker,  69  111.  360. 

i22Lindl.  Partn.  p.  200. 

122a  See  post,  §  136  et  seq. 

123  Stout  v.  Baker,  32  Kan.  113,  4  Pac.  141;  Saunders  v.  Reilly,  105 
N.  Y.  12,  12  N.  E.  170,  Burdick's  Cases,  277;  Leinkauff  v.  Munter,  76 
Ala.  194;  Clayton  v.  May,  68  Ga.  27;  Hamsmith  v.  Espy,  13  Iowa,  439, 
Burdick's  Cases,  376;  Stevens  v.  Perry,  113  Mass.  380,  Burdick's 
Cases,  377.  Compare  Jaffray  v.  Jennings,  101  Mich.  515,  60  N.  W. 
52,  Burdick's  Cases,  378. 


COMMENCEMENT  OF  LIABILITY.  209 

Stipulations  Limiting  Liability. 

In  the  absence  of  statute,  the  only  effectual  way  of  limiting 
the  liability  of  a  partner  is  to  stipulate  with  each  creditor 
that  he  shall  be  paid  only  out  of  the  funds  of  the  partnership, 
and  that  he  shall  not  be  entitled  to  require  the  individual 
partners  to  pay  more  than  a  certain  amount.124  Certainly  a 
limitation  contained  in  the  articles  of  association  would  not 
bind  a  creditor  who  had  no  notice  of  such  limitation  at  the 
time  the  indebtedness  was  incurred,125  and  it  is  at  least  doubt- 
ful whether  a  stiplation  between  partners  limiting  the  liability 
of  one  of  them  for  losses  would  affect  even  a  creditor  with 
notice,  for  such  a  stipulation  is  quite  consistent  with  an  in- 
tention that  all  of  the  partners  should  be  primarily  bound  to 
third  persons,  but  that,  as  between  themselves  some  of  them 
should  indemnify  the  others  in  case  of  loss.126 

Limited  Partnership  and  Joint-Stock  Companies. 

Iri  several  jurisdictions,  statutes  exist  under  which  a  species 
of  partnership,  known  as  a  "limited  partnership,"  may  be 
formed,  in  which  the  liability  of  some  of  the  members  is  lim- 
ited to  a  definite  sum.  So,  also,  the  liability  of  members  of 
joint-stock  companies  is  sometimes  limited  by  statute.  These 
subjects  will  be  treated  separately  in  subsequent  chapters.127 


Commencement  of  Liability. 


A  partner  is  not  liable  for  the  debts  and  obligations  in- 
curred by  his  copartners  before  the   partnership  be-  , 
tween  him  and  them  was  formed,  except — 


Exception — Where  he  expressly  assumes  liability. 


i2*Lindl.  Partn.  p.  201. 

125  Ellison  v.  Stuart,  2  Pen.  (Del.)   179,  43  Atl.  837. 

128  See  Everitt  v.  Chapman,  6  Conn.  347. 

12~  See  post,  cc.  12  and  13. 

14 


210  AS  TO  THIRD  PERSONS. 

The  agency  of  a  partner,  to  bind  his  firm  and  his  copartners, 
commences  only  with  the  commencement  of  the  partnership. 
A  person,  therefore,  who  enters  into  partnership  with  another, 
or  joins  an  existing  firm,  does  not  thereby  become  liable  to  the 
creditors  of  his  partner  or  of  the  firm  for  anything  done  be- 
fore he  became  a  partner.128  The  point  of  time  when  a  part- 
nership begins  must  be  determined  upon  principles  already 
discussed.129  An  incoming  partner  will,  however,  be  liable 
for  new  debts  arising  after  he  has  joined  the  firm,  under  a 
continuing  contract  entered  into  with  the  firm  before  that 
time.130  So,  where  there  is  a  partnership  in  the  performance 
of  a  single  contract,  a  new  member  cannot  identify  himself 
with  the  firm,  and  buy  into  the  partnership  contract,  without 
making  himself  liable  for  the  obligations  of  that  contract.131 

Assumption  of  Debts. 

Where  an  incoming  partner  or  the  new  firm  formed  by  his 
entrance,  agrees  with  the  old  firm  to  assume  some  or  all  of  its 
debts,  the  cases  are  in  considerable  conflict  as  to  whether  or 
not  the  creditors  of  the  old  firm  acquire  any  rights  under  the 

128  Saville  v.  Robert,  4  Term  R.  720;  Gabriel  v.  Evill,  9  Mees.  & 
W.  297;  Heap  v.  Dobson,  15  C.  B.  (N.  S.)  460;  Valentine  v.  Hickle, 
39  Ohio  St.  19;  Heckert  v.  Fegely,  6  Watts  &  S.  (Pa.)  139;  Wilson  v. 
Whitehead,  10  Mees.  &  W.  503;  Corner  v.  Mackey,  147  N.  Y.  574,  42 
N.  E.  29;  Sizer  v.  Ray,  87  N.  Y.  220;  Guild  v.  Belcher,  119  Mass.  257; 
Hoyt  v.  Hasse,  80  111.  App.  187;  Penn  v.  Fogler,  182  111.  76,  55  N.  E. 
192;  Salter  v.  Edward  Hines  Lumber  Co.,  77  111.  App.  97;  Nix  v. 
First  Nat.  Bank,  23  Colo.  511,  48  Pac.  522;  Rohlfing  v.  Carper,  53 
Kan.  251,  36  Pac.  336;  Wolff  v.  Madden,  6  Wash.  514,  33  Pac.  975; 
Bank  of  Scott  City  v.  Sandusky,  51  Mo.  App.  398. 

129  See  chapter  1,  and  specially  section  24. 

iso  Dyke  v.  Brewer,  2  Car.  &  K.  828.  An  incoming  partner  is  not 
liable  on  a  written  agreement  of  employment  for  more  than  a  year, 
made  before  his  entry  into  the  firm,  and  signed  in  the  firm  name 
only.  Hughes  v.  Gross,  166  Mass.  61,  43  N.  E.  1031,  Burdick's  Cases, 
296. 

i3i  Jones  v.  Davies,  60  Kan.  309,  56  Pac.  484. 


COMMENCEMENT  OF  LIABILITY.  211 

agreement.  Of  course,  as  between  the  parties  to  the  contract, 
it  is  binding,  and  may  be  enforced. 

In  some  jurisdictions,  the  doctrine  prevails  that  a  person 
not  a  party  to  a  contract  cannot  sue  upon  it,  although  it  was 
made  for  his  benefit.  In  such  jurisdictions,  an  assumption 
of  the  debts  of  the  old  firm  by  the  new  firm  gives  the  creditor 
no  rights  against  the  new  firm.132  Under  this  doctrine,  to 
give  the  creditors  any  right  in  the  premises,  there  must  bo 
some  agreement  to  that  effect  between  the  new  partners  and 
creditors.133  The  court  appears  to  imply  such  an  agreement 
somewhat  readily  if  there  is  any  evidence  to  support  it.134 

In  other  jurisdictions  the  doctrine  prevails  that  a  person 
for  whose  benefit  a  contract  has  been  made  may  sue  upon  it, 
though  not  himself  a  party  thereto.  Under  this  doctrine,  a 
creditor  of  the  old  firm  who  can  show  that  his  debt  was  one 
of  those  included  in  the  assumption  of  debts  may  recover 
against  the  new  firm.135  But  when  the  agreement  assuming 
debts  is  in  such  form  that  no  particular  creditor  can  show 
that  it  was  made  for  his  benefit,  as  where  the  agreement  was 
simply  to  pay  a  certain  proportion  of  the  debts  of  the  old  firm, 
without  specifying  any  particular  debts,  no  creditor  can  sue 
upon  it,  but  it  must  be  enforced,  if  at  all,  by  the  parties  with 
whom  it  was  made.136 


i32Lindl.  Partn.  p.  208;  Shoemaker  Piano  Mfg.  Co.  v.  Bernard,  2 
Lea  (Tenn.)  358;  Parmalee  v.  Wiggenhorn,  6  Neb.  322;  Vere  v. 
Ashby,  10  Barn.  &  C.  288. 

133  Rolfe  v.  Flower,  L.  R.  1  P.  C.  27. 

i34Rolfe  v.  Flower,  L.  R.  1  P.  C.  27;  Ex  parte  Jackson,  1  Ves.  Jr. 
131,  1  Rev.  R.  91;  Ex  parte  Williams,  Buck,  13;  Jones  v.  Davies,  60 
Kan.  309,  56  Pac.  484.  A  promise  to  assume  liability  may  be  inferred 
from  the  conduct  of  an  incoming  partner.  Salter  v.  Edward  Hines 
Lumber  Co.,  77  111.  App.  97. 

135  Arnold  v.  Nichols,  64  N.  Y.  117. 

136  Wheat  v.  Rice,  97  N.  Y.  296;  Serviss  v.  McDonnell,  107  N.  Y. 
260,  14  N.  E.  314. 


212  AS  TO  THIRD  PERSONS. 

The  assumption  of  indebtedness  by  an  incoming  partner 

is  nut  within  the  statute  of  frauds  and  nerd  qo1  be  in  writ- 
ing. 1,iCa 

Termination  or  Liability. 

118.  In  order  to  determine  the  events  whicl^put  an  end  * 
to  a  partner's  liability  to  creditors,  it  is  necessary  to  ~ \ 
distinguish  his  liability  for  the  future  from  his  liability  _ 
for  the  past. 

Same — Foe  Futuee  Acts. 

119.  A  partner's  liability  for  the  acts  of  his  copartners 
ceases  upon  his  retirement  from  the  firm,  or  its  disso- 
lution, except — 

Exception — In  most  cases,  notice  of  retirement  is  neces- 
sary to  terminate  liability. 

As  a  general  rule,  a  partner  is  not  liable  for  the  acts  of  his 
former  partners  after  the  dissolution  of  his  firm,  or  his  re- 
tirement from  it,  and  due  notification,  when  necessary,  of  the 
fact,1::T  for  the  agency  of  the  partners  for  each  other  is  thereby 
terminated.  If,  however,  the  retiring  partner  holds  himself 
ou1  as  being  still  a  partner,  or  allows  others  to  do  so,  he  is 
liable  upon  principles  already  explained.138  So,  notwith- 
standing a  dissolution,  all  the  partners  remain  liable  for  acts 
of  their  former  copartner  necessary  to  complete  transactions 

i^aBarlett  v.  Smith  (Neb),  98  N.  W.  687. 

''•"Ex  parte  Central  Bank  of  London  [1892],  2  Q.  B.  633;  Abel  v. 
Sutton,  3  Esp.  108,  6  Rev.  R.  818;  Minnit  v.  Whinery,  5  Bro.  P.  C. 
489;  Monroe  v.  Conner,  15  Me.  178;  Yeager  v.  Wallace,  57  Pa.  365; 
Askew  v.  Silman,  95  Ga.  678,  22  S.  E.  573;  Burdick's  Cases,  106; 
Ooodspeed  v.  South  Bend  Chilled  Plow  Co.,  45  Mich.  237,  7  N.  W. 
810;  Matteson  v.  Nathanson,  38  Mich.  377. 

188  See  ante,  §§  35-37.  See,  also,  Speer  v.  Bishop,  24  Ohio  St.  598; 
Richards  v.  Hunt,  65  Ga.  342;  Ellis'  Adm'r  v.  Bronson,  40  111.  455. 


TERMINATION  OF  LIABILITY.  213 

begun,  but  not  finished  at  the  time  of  the  dissolution.139  Any 
partner  may  give  notice  of  the  dissolution  of  the  firm,  or  of 
his  retirement  therefrom,  and  may  require  his  copartners 
to  concur,  for  that  purpose,  in  all  necessary  or  proper  acts 
which  cannot  be  done  without  their  concurrence.140 


Same — Xotice  of  Dissolution. 

120.  Notice  of  dissolution  or  retirement  is  necessary  in  all 

cases  to  terminate  liability  for  future  acts  of  the  other 

partners,  except — 

Exceptions — Notice  is  not  necessary  to  terminate  liability 
in  the  following  cases,  ^dz. : 

(a)  Where  the  dissolution  was  by  operation  of  law. 

1      ■  '    ii  1 1  ■"■■■•'■  ' "" 

(b)  In  the  case  of  unknown,  dormant  and  secret  partners. 

LrfS 

(c)  In  the  case  of  torts.  <}'  y. 

121.  Where  notice  is  necessary,  former  customers  of  the  _ 

firm  are  entitled  to  actual  notice,  but  notice  by  publi- 
cation  is  sufficient  as  to  all  others. 

Speaking  generally,  a  person  who  deals  with  an  agent,  and 
knows  that  he  has  authority  to  act  for  his  principal,  is  entitled 
to  assume  the  continuance  of  that  authority  until  ho  has  no- 
tice of  its  revocation,  unless  such  revocation  is  caused  by  the 

i'">Thursby  v.  Lidgerwood,  69  N.  Y.  198;  Rust  v.  Chisolm,  57  Md. 
376;  Merrill  v.  Blanchard,  7  App.  Div.  (N.  Y.)  167.  Compare  Brisban 
v.  Boyd,  4  Paige  (N.  Y.)  17;  Moore  v.  Duckett,  91  Ga.  752,  17  S.  E. 
1037.  In  Court  v.  Berlin  [1897],  2  Q.  B.  396,  a  solicitor,  retained  by 
by  a  firm  to  bring  an  action  for  the  recovery  of  a  partnership  debt,  re- 
covered from  retired  partners  costs  incurred  after  their  retirement, 
for  the  liability  was  really  incurred  before  their  retirement,  namely, 
when  the  solicitor  was  retained.  Compare  the  converse  case,  Dyke  v. 
Brewer,  2  Car.  &  K.  828. 

ii"  English  Partnership  Act  1890,  §  37;  Hendry  v.  Turner,  32  Ch. 
Div.  355;   Troughton  v.  Hunter,  18  Beav.  470. 


I  M 


21-t  AS  TO  THIRD  PERSONS. 

death  of  the  principal.141  Consequently,  with  the  exceptions 
hereafter  mentioned,  ;i  partner,  in  order  to  terminate  his  lia- 
bility for  the  future  acts  of  his  partners,  must  not  only  cease 
to  be  a  partner,  bul  must  also  give  due  notice  of  this  fact.142 
If  a  secret  dissolution  were  binding  upon  third  persons,  the 
partners  would  be  in  a  position  to  defraud  them,  and  no  one 
could  safely  deal  with  a  partnership  in  the  way  business  is 
usually  carried  on. 

Dissolution  by  Operation  of  Law. 

Where  a  partnership  is  dissolved  by  operation  of  law,  no 
notice  of  dissolution  is  necessary  to  terminate  liability  for 
future  acts.143  The  reason  assigned  for  this  rule  is  that  dis- 
solution by  operation  of  law  is  of  a  public  and  not  of  a  pri- 
vate nature,  and  is  presumed  to  be  taken  notice  of  by  every 
one.144  As  will  be  seen  in  the  following  chapter,  a  partner- 
ship is  dissolved  by  operation  of  law  upon  the  death  or  bank- 
ruptcy of  a  partner,  or  upon  the  breaking  out  of  war  between 
the  countries  in  which  the  partners  respectively  reside. 

Dormant  and  Secret  Partners. 

JJnknown,  ^dormant  and  jjeqret  partners  need  not  ^'ye.  no- 
tice   of   retirement    in    order   to   terminate   their  liability.1"15 

i«  Blades  v.  Free,  9  Barn.  &  C.  167. 

142  Arnold  v.  Hart,  176  111.  442,  52  N.  B.  936;  Morrill  v.  Bissell,  99 
Mich.  409,  58  N.  W.  324;  Austin  v.  Holland,  69  N.  Y.  571,  Mechem's 
Cases,  370;  Howell  v.  Adams,  68  N.  Y.  314;  Woodruff  v.  King,  47 
Wis.  261,  2  N.  W.  252;  Southern  v.  Grim,  67  111.  106;  Parker  v.  Can- 
field,  37  Conn.  250,  9  Am.  Rep.  317;  Burgan  v.  Lyell,  2  Mich.  102, 
Burdick's  Cases,  312,  55  Am.  Rep.  53;  Clement  v.  Clement,  69  Wis. 
599,  35  N.  W.  17,  2  Am.  St.  Rep.  760. 

143  Bank  of  New  Orleans  v.  Matthews,  49  N.  Y.  12;  Lyon  v.  John- 
son, 28  Conn.  1;  Dickinson  v.  Dickinson,  25  Grat.  (Va.)  321;  Gris- 
wold  v.  Waddington,  16  Johns.   (N.  Y.)  438. 

144  Bates,  Partn.  §  610;  Mechem,  Partn.  §  260;  Eustis  v.  Bolles, 
146  Mass.  413,  16  N.  E.  286. 

145  Nussbaumer  v.  Becker,  87  111.  281;   Pitkin  v.  Benfer,  50  Kan. 


TERMINATION  OF  LIABILITY.  215 

"When  a  dormant  partner  ceases  to  be  a  member  of  the  firm, 
the  real  authority  of  his  copartners  to  bind  him  is  thereby 
withdrawn,  and  as  ex  hypothesi  no  one  knows  of  the  authority, 
no  one  is  entitled  to  rely  upon  its  continuance.146  If,  how- 
ever, a  person  not  generally  known  to  have  been  a  partner  is 
known  to  certain  individuals  to  have  been  a  partner,  he  is  not 
a  dormant  partner  as  to  them,  and  notice  of  his  retirement 
must  be  given  to  them.147 

Torts. 

It  would  seem  that  a  failure  to  give  notice  of  retirement 
will  not  render  the  retiring  partner  liable  for  torts  committed 
subsequently  to  his  retirement  by  his  late  copartners  or  their 
agents,  as  in  such  case  there  is  no  reliance  upon  his  continued 
presence  in  the  firm.148 

108,  31  Pac.  695,  Mechem's  Cases,  313;  Elmira  Iron,  etc.  Co.  v.  Har- 
ris, 124  N.  Y.  280,  26  N.  E.  541,  Burdick's  Cases,  398;  Howell  v. 
Adams,  68  N.  Y.  314;  Warren  v.  Ball,  37  111.  81;  Vaccaro  v.  Toof,  9 
Heisk.  (Tenn.)  194;  Gilchrist  v.  Brande,  58  Wis.  184,  15  N.  W.  817; 
Cxorman  v.  Davis  &  Gregory  Co.,  118  N.  C.  370,  24  S.  E.  770. 

no  Carter  v.  Whalley,  1  Barn.  &  Adol.  14;  Heath  v.  Sansom,  4  Barn. 
&  Adol.  172.  If  one  is  not  in  fact  a  dormant  partner,  the  mere  fact 
that  he  was  not  known  to  be  a  partner  does  not  relieve  him  of  the 
necessity  of  giving  notice  of  retirement.  Bouker  Contracting  Co.  v. 
Scribner,  52  App.  Div.  505,  65  N.  Y.  Supp.  444. 

lirFarrar  v.  Deflinne,  1  Car.  &  K.  580;  Nussbaumer  v.  Becker,  87 
111.  281;  Ellis'  Adm'rs  v.  Bronson,  40  111.  455;  Kelley  v.  Hurlburt,  5 
Cow.  (N.  Y.)  534;  Southwick  v.  McGovern,  28  Iowa,  533;  Benjamin 
v.  Covert,  47  Wis.  375,  2  N.  W.  625;  Brown  v.  Foster,  41  S.  C.  118,  19 
S.  E.  299. 

1*8  Shapard  v.  Haynes,  104  Fed.  449,  52  L.  R.  A.  675;  Lindl.  Partn. 
p.  215.  In  Stables  v.  Eley,  1  Car.  &  P.  614,  a  retired  partner  was  held 
liable  in  tort  upon  the  ground  of  holding  out;  but  this  case  has  been 
pronounced  unsound  in  principle  by  eminent  authority.  See  Lindl. 
Fartn.  p.  315,  note;  Pollock,  Partn.  (3d  Ed.)  p.  25.  See,  also,  ante, 
5§  35-37.  A  quasi-partner  is  liable  for  torts  founded  upon  contract. 
Sherrod  v.  Langdon,  21  Iowa,  518,  Burdick's  Cases,  112;  Maxwell  v. 
Gibbs,  32  Iowa,  32. 


216  AS  TO  THIRD  PERSONS. 

Sufficiency  of  Notice. 

All  persons  who  liave  bad  dealings  with  the  firm  before  its 
dissolution  are  entitled  to  have  actual  notice;  .Mere  j » t 1 1  >  1 1 < - ; i - 
tion  in  a  newspaper  i-^  nol  sufficient.  Bui  if,  in  anv  case, 
actual  notice  can  be  shown,  it  i-  immaterial  how  it  is  given-148 

A-  in  persons  who  have  had  no  dealings  with  the  linn  prior 
to  it<  dissolution,  fair  notice  in  anv  public  and  notorious  man- 
ner i-  sufficient  Notice  by  publication  in  a  newspaper  cir- 
culated  in  the  locality  in  which  tin1  business  of  the  partner- 
ship lias  been  conducted  is  the  usual  and  best  method  of  giv- 
ing such  general  notice.150 

«9  Graham  v.  Hope,  Peake,  208,  3  Rev.  R.  671;  Rooth  v.  Quin,  7 
Price,  193,  21  Rev.  R.  744;  Barfoot  v.  Goodall,  3  Camp.  147;  Bouker 
Contracting  Co.  v.  Scribner,  52  App.  Div.  505,  65  N.  Y.  Supp.  444; 
Austin  v.  Holland,  69  N.  Y.  571,  Mechem's  Cases,  370;  Howell  v. 
Adams,  68  N.  Y.  314;  National  Shoe  and  Leather  Bank  v.  Herz,  89 
N.  Y.  629;  Elmira  Iron  &  Steel  Rolling-Mill  Co.  v.  Harris,  124  N.  Y. 
280,  26  N.  E.  541,  Burdick's  Cases,  398;  Meyer  v.  Krohn,  144  111.  574, 
2  N.  E.  495;  Robinson  v.  Floyd,  159  Pa.  165,  28  Atl.  258;  Haynes  v. 
Carter,  12  Heisk.  (Tenn.)  7;  Potter  v.  Tolbert,  113  Mich.  486,  71  N. 
W.  849;  Gathright  v.  Burke,  101  Ind.  590;  Rose  v.  Coffield,  53  Md.  18; 
Vernon  v.  Manhattan  Co.,  22  Wend.  (N.  Y.)  183;  Clapp  v.  Rogers, 
12  N.  Y.  283;  City  Bank  v.  MeChesney,  20  N.  Y.  240.  Declarations  of 
the  remaining  partner  to  neighbors  are  no  evidence  of  actual  notice 
of  dissolution  to  a  creditor  living  500  miles  away.  Gage  v.  Rogers, 
51  Mo.  App.  428.  Actual  notice  of  the  dissolution  may  be  inferred  by 
the  jury  from  the  remaining  partner's  testimony  that  at  once,  after 
the  dissolution,  she  notified  the  commercial  agencies,  which  dis- 
tributed the  information  by  its  daily  slips  to  subscribers,  among 
whom  was  the  creditor,  and  that  such  slips  were  daily  examined  by 
the  latter's  credit  man.  Gage  v.  Rogers,  51  Mo.  App.  428.  Notice 
to  plaintiff's  traveling  salesman  that  defendant  had  withdrawn  from 
the  firm  to  which  the  salesman  sold  goods  for  plaintiff  was  notice  to 
plaintiff,  so  as  to  relieve  defendant  from  liability  for  the  price  of  the 
goods  sold.  Ach  v.  Barnes,  21  Ky.  L.  R.  893,  53  S.  W.  293;  Cowan  v. 
Roberts,  133  N.  C.  629,  45  S.  E.  954.  A  statement  to  a  clerk  by  a  per- 
son buying  for  a  firm  that  he  thought  one  of  the  partners  had  sold 
out  is  not  notice  to  the  employer  of  the  clerk.  Brown  v.  Foster,  41 
S.  C.  118,  19  S.  E.  299.  Notice  to  a  bookkeeper  is  ordinarily  insuffi- 
cient.    Cowan  v.  Roberts,  supra. 

iso  Askew  v.  Silman,  95  Ga.  678,  22  S.  E.  573,  Burdick's  Cases,  106; 


TERMINATION  OF  LIABILITY.  217 


Same — For  Pasi  Acts. 

122.     The  liability  of  partners  for  past  obligations  of  flip.  - 
firm  continues  after  retirement  or  dissolution,  and  un- 
til such  obligations  are  discharged  by — 

(a)  Payment. 

(b)  Release. 

(c)  Novation. 

(d)  Merger  by  judgment. 

(e)  Bankruptcy. 

(f)  Limitation. 

With  regard  to  a  partner's  liability  for  past  acts,  a  partner 
who  retires  from  a  firm  docs  not  thereby  cease  to  be  liable  for 
the  partnership  debts  and  obligations  incurred  before  bis  re- 
tirement. Nor  will  death  release  the  estate  of  a  deceased 
partner  from  liabilies  incurred  during  his  life.  It  is  neces- 
sary, therefore,  to  consider  shortly  the  more  important  ways 
by  which  a  partner  or  the  estate  of  a  deceased  partner  may 
be  freed  from  such  liability. 

Payment. 

An  obligation,  whether  it  be  joint  or  joint  and  several,  is 
di-i'lur^vd  if  performed  by  any  one  of  the  person-  obliged  ;ir" 
therefore  payment  of  partnership  debt  by  any  one  partner 
will  discharge  all  the  rest,152  unless,  indeed,  the  partner  who 
pays  the  debl  pays  it  out  of  his  own  moneys,  and  in  such  a 
way  as  to  show  his  intention  to  keep  the  debt  alive  as  against 
the  firm,153  though  it  would  seem  that,  even  in  that  case,  the 

Lovejoy  v.  Spafford,  93  U.  S.  430;  Ellison  v.  Sexton,  105  N.  C.  356, 
11  S.  E.  180. 

i"i  See  Beaumont  v.  Greathead,  2  C.  B.  494. 

'■-LePage  v.  McCrea,  1  Wend.  (N.  Y.)  164;  Booth  v.  Farmers'  & 
Mechanics'  Nat.  Bank,  74  N.  Y.  228;  Hinton  v.  Odenheimer,  4  Jones 
Eq.  (N.  C.)  406;  Hogan  v.  Reynolds,  21  Ala.  56. 

'■" ••■••  Lindl.  Partn.  p.  225  et  seq;  Mclntyre  v.  Miller.  13  Mees.  &  W. 
725;  Sells  v.  Hubbell's  Adm'rs,  2  Johns.  Ch.  (N.  Y.)  394. 


218  AS  TO  THIRD  PERSONS. 

liability  would  be  extinguished,  and  the  payment  would  con- 
stitute a  mere  item  in  the  partnership  account.154 

In  considering  discharge  by  payment,  attention  must  be- 
paid  to  the  genera]  rules  relating  to  the  appropriation  of  pay- 
ments,15-"' ;ind  especially  !<>  the  rule  in  (dayton's  Case,150 
which  is  that,  where  (here  i-  one  single  open  current  ac- 
count157 between  two  parties^  every  payment  which  cannot  be 
shown  to  have  been  made  in  discharge  of  some  particular  item 
is  imputed  to  the  earliest  item  standing,  to  the  debt  of  the 
payer  at  the  time  of  payment.     The  application  of  this  rule 

Jl^di—M     »»i  i  »  n     Tin  n  i  i  run    1m  iiMi— — O0  J-  i- 

Avill  discharge  from  liability  the  estate  of  a  deceased  part- 
ner,158 and  a  retired  partner,  whether  known159  or  dor- 
mant.100 This  rule,  like  the  other  rules  relating  to  the  ap- 
propriation of  payments,  is  not  a  rigid  rule  of  law,  but  de- 
pends upon  the  intention  of  the  parties,  expressed,  implied  or 


15*  Bates,  Partn.  §  531,  citing  Bartlett  v.  McRae,  4  Ala.  688. 

155  As  to  the  general  rule  for  the  application  of  payments,  see 
Pates,  Partn.  §  489;  Lindl.  Partn.  p.  226.  Partnership  cases  on  appli- 
cation of  payments.  Miles  v.  Ogden,  54  Wis.  573,  12  N.  W.  81;  Witt- 
kowsky  v.  Ried,  82  N.  C.  116;  Brown's  Ex'rs  v.  Brabham,  3  Ohio, 
275;  Logan  v.  Mason,  6  Watts  &  S.  (Pa.)  9;  Youmans  v.  Heartt,  34 
Mich.  397. 

i5c  General  authorities  on  rule  in  Clayton's  Case;  Clayton's  Case, 

1  Merivale,  572,  15  Rev.  R.  161;  Morgan  v.  Tarbell,  28  Vt.  498;  Starr 
v.  Case,  59  Iowa,  491;  Jones  v.  Maund,  3  Younge  &  C.  347;  Taylor  v. 
Post,  30  Hun  (N.  Y.)  446;  Simson  v.  Ingham,  2  Barn.  &  C.  65;  Burns 
v.  Pillsbury,  17  N.  H.  66;  Botsford  v.  Kleinhans,  29  Mich.  332; 
Hooper  v.  Keay,  1  Q.  B.  Div.  178;  Brooke  v.  Enderby,  2  Brod.  &  B. 
70,  22  Rev.  R.  653;  Newmarch  v.  Clay,  14  East,  329;  Beale  v.  Caddick, 

2  Hurl.  &  N.  326,  Burland  v.  Nash,  2  Fost.  &  F.  687. 

is:  Cory  Bros.  &  Co.  v.  Owners  of  the  Mecca  [1897],  App.  Cas.  286. 

158  Clayton's  Case,  1  Merivale,  572,  15  Rev.  R.  161. 

159  Hooper  v.  Keay,  1  Q.  B.  Div.  178;  Allcott  v.  Strong,  9  Cush. 
(Mass.)  323;  Baker  v.  Stackpole,  9  Cow.  (N.  Y.)  420,  18  Am.  Dec. 
508. 

ico  Brooke  v.  Enderby,  2  Brod.  &  B.  70,  22  Rev.  R.  653;  Newmarch 
v.  Clay,  14  East,  239. 


TERMINATION  OF  LIABILITY.  219 

presumed,101  consequently  it  will  not  be  applied  against  a 
creditor  in  respect  of  a  fraud  committed  on  him,  of  which  he 
is  ignorant.162 

A  payment  out  of  partnership  funds  must  be  applied  to  the 
partnership  debt,  and  not  to  the  individual  debt  of  the  part- 
ner making  the  payment.163 

Release. 

When  several  persons  are  bound  jointly  or  "jointly  and  sev- 
erally,  a  release  of  one  is  a  release  of  them  all ;  hence,  a  re- 
lease  of  one  partner  from  a  partnership  liability,  whether  it 
arises  from  nrmflraftt  or  tor^.  discharges  all  the  others.164  But 
a  covenant  not  to  sue  one  partner  has  not  this  effect,165  and  a 
release  so  drawn  as  to  show  that  it  is  intended  to  inure  only 
for  the  benefit  of  the  releasee  personally  is  equivalent  to  a 
covenant  not  to  sue.160  If,  however,  the  debt  be  in  fact  re- 
leased, any  attempt  to  reserve  a  right  of  action  against  other 

i6i  Cory  Bros.  &  Co.  v.  Owners  of  the  Mecca  [1897],  App.  Cas.  286; 
In  re  Hallett's  Estate,  13  Ch.  Div.  696. 

162  Clayton's  Case,  1  Merivale,  572,  15  Rev.  R.  161;  Lacey  v.  Hill,  4 
Ch.  Div.  537,  affirmed  sub  nom.  Read  v.  Bailey,  3  App.  Cas.  94.  See, 
too,  Wlckham  v.  Wickham,  2  Kay  &  J.  478. 

163  Bates,  Partn.  §  493. 

i':*  Bower  v.  Swadlin,  1  Atk.  294;  Cheetham  v.  Ward,  1  Bos.  &  P. 
630,  4  Rev.  R.  741;  Duck  v.  Mayeu  [1892],  2  Q.  B.  511;  Elliott  v. 
Holbrook,  33  Ala.  659;  Le  Page  v.  McCrea,  1  Wend.  (N.  Y.)  164; 
Rice  v.  Woods,  21  Pick.  (Mass.)  30.  "Where  a  judgment  against  a 
firm  and  its  individual  members  was  released  as  to  one  member,  the 
judgment  creditor  had  thereafter  no  right  to  have  a  receiver  of  the 
partnership  property  appointed  in  supplementary  proceedings." 
Hunter  v.  Hunter,  73  N.  Y.  Supp.  886. 

WBHutton  v.  Eyre,  6  Taunt.  289,  16  Rev.  R.  619;  Duck  v.  Mayeu 
[1892],  2  Q.  B.  511;  Bates  v.  Wills  Point  Bank,  11  Tex.  Civ.  App.  73, 
32  S.  W.  339;  Couch  v.  Mills,  21  Wend.  (N.  Y.)  424.  And  see  Faneuil 
Hall  Nat.  Bank  v.  Meloon,  183  Mass.  66,  66  N.  E.  410,  97  Am.  St. 
Rep.  416. 

lee  Solly  v.  Forbes,  2  Broad.  &  B.  38,  22  Rev.  R.  641;  Price  v. 
Barker,  4  El.  &  Bl.  760;  Duck  v.  Mayeu  [1892],  2  Q.  B.  511;  Pearce^ 
v.  Wilkins,  2  N.  Y.  469. 


220  AS  TO  THIRD  PERSONS. 

parties  in  respect  of  it  will  be  futile.167  By  statute  in  some 
states  a  release  of  one  partner  by  compromise  does  not  oper- 
ate as  a  release  of  all.188 

Novation. 

Where  a  partner  retires,  or  the  firm  is  dissolved  and  suc- 
ceeded by  a.  new  firm?  the  retiring  partner,  or  the  members 
of  the  old  firm,  may  be  relieved  of  its  liabilities  by  an  agrees 
ment  with,,fne  remfljninff  partners  or  foe  new  firm,  bv  wfrieh 
the  hitter  assume  such  liabilities,  provided  the  creditor  as- 
miii-  to  siK-h  agreement,  discharges  his  former  debtors,  ;in-l 
accepts  the  new  [inn  as  his  debtors.  Such  an  agreemenl  is 
called  a  "novation,"  and  the  mutual  agreements  of  the  par- 
ties thereto  constitute  a  sufficient  consideration  to  support  it. 
The  agreement  of  the  new  firm  to  pay  the  debt  constitutes  a 
sufficient  consideration  for  the  promise  of  the  creditor  to  dis- 
charge his  former  debtors,  and  vice  versa,  though  there  have 
been  distinctions  drawn  between  cases  where  a  new  partner 
has  been  introduced  into  the  firm,  and  where  a  partner  has 
simply  retired."'1'  The  difficulty  in  applying  this  rule  is  one 
of  fact,  whether  such  an  agreement  as  is  here  mentioned  has 
or  has  not  been  entered   into.170      The  mere  retirement  of  a 

i«7  Commercial  Bank  v.  Jones  [1893],  App.  Cas.  313. 

i«8  See  Wheeling  Corrugating  Co.  v.  Veach,  7  Ohio  Dec.  521. 

e-' See,  generally,  as  to  consideration,  the  following  cases:  Early 
v.  Burt,  G8  Iowa,  716,  28  N.  W.  35;  Walstrom  v.  Hopkins,  103  Pa. 
118;  Backus  v.  Fobes,  20  N.  Y.  204;  Eagle  Mfg.  Co.  v.  Jennings,  29 
Kan  657;  Lodge  v.  Dicas,  3  Barn.  &  Aid.  611;  David  v.  Ellice,  5 
Barn.  &  C.  196;  Thompson  v.  Percival,  5  Barn  &  Adol.  925;  Lyth  v. 
Ault,  7  Exch.  669,  Burdick's  Cases,  385;  Wild  v.  Dean,  3  Allen 
(Mass.)  579;  York  v.  Orton,  65  Wis.  6,  26  N.  W.  166;  Clark  v.  Bill- 
ings, 59  Ind.  508. 

i7o  Bedford  v.  Deakin,  2  Barn.  &  Aid.  210;  Jacomb  v.  Harwood, 
2  Yes.  Sr.  265;  Kirwan  v.  Kirwan,  2  Cromp.  &  M.  617,  Burdick's 
Cases,  384;  Gough  v.  Davies,  4  Price,  200;  Blew  v.  Wyatt,  5  Car. 
&  P.  397;  Robinson  v.  Wilkinson,  3  Price,  538,  Burdick's  Cases,  396, 
18  Rev.  R.  659. 


TERMINATION  OF  LIABILITY.  221 

partner  raises  no  presumption  in  favor  of  such  an  agree- 
ment,171 nor  does  mere  silence  of  the  creditor  amount  to  an 
assent.172  Of  course,  no  agreement  between  the  partners  can 
discharge  their  liability  to  a  creditor  without  or  against  his 
consent. 172a  But  though,  in  such  a  case,  all  the  partners  are 
primarily  liable  to  a  creditor,  as  between  themselves,  the 
agreement  assuming  debts  creates  the  relation  of  principal 
and  surety,  and  the  party  in  whose  favor  such  an  agreement 
is  made  has  all  the  rights  of  a  surety.  If  he  pays  the  debt, 
he  is  subrogated  to  the  rights  of  the  creditor,  and  if,  with  no- 
tice of  the  agreement,  the  creditor  extends  the  time  of  pay- 
ment to  the  other  partners,  he  is  discharged.173 

Merger  by  Judgment. 

Where  a  debt  is  reduced  to  judgment,  it  is  merged  in  the 
higher  security,  and  can  no  longer  be  made  the  subject  of  a 

"~  Vil    _■■    Ill«— "■TT-  rillMim        I  ill   II  II  -  --^ — ■— ■— ■»*— — »M^^ 

separate  suit.  Accordingly,  if  a  partnership  creditor  obtains- 
judgment  upon  his  claim,  he  loses  his  remedy  against  the 
other  partners,  even  if  they  were  not  known  to  him.174     This 


iTiLyth  v.  Ault,  7  Exch.  669,  Burdick's  Cases,  385;  Benson  v.  Had- 
field,  4  Hare,  37. 

172  Heath  v.  Percival,  1  P.  Wms.  682;  Norman  v.  Jackson  Fertilizer 
Co.,  79  Miss.  747,  31  So.  419. 

i'-n.  "A  retiring  partner  remains  liable  to  all  the  existing  debts  of 
the  firm  to  the  same  extent  as  if  he  had  not  retired  and  hence  an 
agreement  between  him  and  the  remaining  partner  that  the  remain- 
ing partner  will  assume  and  pay  all  existing  debts  of  the  firm,  while 
valid  as  between  themselves,  cannot  change  their  relation  to  the 
creditors  unless  the  creditors  become  parties  thereto."  Grotte  v. 
Weil,  62  Neb.  478,  87  N.  W.  173. 

i"  McLaughlin  v.  Bieber,  56  N.  Y.  Supp.  490;  Smith  v.  Shelden, 
35  Mich.  42;  Laylin  v.  Knox,  41  Mich.  40;  Chandler  v.  Higgins,  109 
111.  602;  Shamburg  v.  Abbott,  112  Pa.  6,  4  All.  518;  Palmer  v.  Purdy, 
83  N.  Y.  144;  Savage  v.  Putnam,  32  N.  Y.  501;  Sydam  v.  Cannon,  1 
Houst.  (Del.)  431;  Conwell  v.  McCowan,  81  111.  285. 

174  Lindl.  Partn.  p.  255;  Kendall  v.  Hamilton,  4  App.  Cas.  504,  Bur- 
dick's Cases,  488;   King  v.  Hoare,  13  Mees.  &  W.  494;    Lingenfelser 


222  AS  TO  THIRD  PERSONS. 

rule  has  been  changed  by  statute  in  some  states.  It  has  no 
application  to  the  case  of  a  deceased  partner.  The  creditor 
may  recover  judgment  against  the  survivors  and  also  prove 
against  the  estate  of  the  deceased.175  Proof  in  bankruptcy 
against  one  partner  will  not  so  merge  the  debt  as  to  prevent 
recourse  on  the  others.170 

Bankruptcy. 

The  individual  bankruptcy  of  a  partner  and  his  subsequent 
discharge  will  release  him  from  his  liabilities  as  a  partner,177 
bul  ilic  bankruptcy  and  discharge  of  his  copartners  only  will 
not  have  this  effect,  and  it  has  been  held  that  a  separate  dis- 
charge will  not  relieve  a  partner  of  liability  for  firm  debts 
unless  there  were  no  partnership  assets  at  the  time  of  the  dis- 
charge.178 

Limitations. 

A  partner's  liability  to  be  sued  upon  partnership  obligation 
may,  of  course,  be  barred  bv  the  statute  of  limitations. 

v.  Simon,  49  Ind.  82;  Olmstead  v.  Webster,  8  N.  Y.  413;  Smith  v. 
Black,  9  Serg.  &  R.  (Pa.)  142;  Scarf  v.  Jardine,  7  App.  Cas.  345. 

"6  Lindl.  Partn.  p.  257. 

iTCKeay  v.  Fenwick,  1  C.  P.  Div.  745;  Whitwell  v.  Perrin,  4  C.  B. 
(N.  S.)   412. 

177  Ex  parte  Hammond,  L.  R.  16  Eq.  614;  Bovill  v.  Wood,  2  Maule 
&  S.  23;  In  re  Brick,  4  Fed.  804;  In  re  Gay,  98  Fed.  870;  Tucker  v. 
Oxley,  5  Cranch  (U.  S.)  34;  In  re  Stevens,  1  Sawy.  397,  Fed.  Cas. 
No.  13,393;  West  Philadelphia  Bank  v.  Gerry,  106  N.  Y.  467,  13  N.  E. 
453;  Curtis  v.  Woodward,  58  Wis.  499,  17  N.  W.  328,  46  Am.  Rep. 
647;  Hawley  v.  Campbell,  62  Cal.  442.  But  compare  Perkins  v. 
Fisher,  80  Ky.  11;  Glenn  v.  Arnold,  56  Cal.  631;  In  re  Noonan,  3 
Biss.  491,  Fed.  Cas.  No.  10,292. 

178  Corey  v.  Perry,  67  Me.  140,  Burdick's  Cases,  466,  24  Am.  Rep. 
15;  Crompton  v.  Conkling,  9  Ben.  225,  Fed.  Cas.  No.  3,407. 


APPLICATION  OF  ASSETS.  223 


Application  of  Assets  to  Liabilities. 

123.  This  subject  will  be  treated  under  the  following  heads : 

(a)  Application  by  voluntary  act  of  partaejs. 

(b)  Application  under  direction  of  court. 

Same — Application  by  Partneks. 

124.  The  partners  may  dispose  of  their  firm  and  individual 
assets  in  a,nv  way  fli^y  ?ee  fit-  provided- 
Proviso — They  must  act  in  good  faith,  and  not_  in  fraud  of 

creditors. 

Partners  own  the  firm  property  just  as  an  individual  owns 
his  own  individual  property.  They  may,  accordingly,  by 
common  agreement,  make  any  disposition  of  it  that  an  indiv- 
idual could  make  of  his  property.179  This  right  of  dispos- 
ition is,  of  course,  subject  to  the  general  rule  of  law,  not  pecu- 

«b  Allen  v.  Center  Valley  Co.,  21  Conn.  130,  54  Am.  Dec.  333; 
Hargadine-McKittrick,  Dry  Goods  Co.  v.  Belt,  74  111.  App.  581;  Fisher 
v.  Syfers,  109  Ind.  514,  10  N.  B.  306;  Hawk  Eye  Woolen  Mills  v. 
Conklin,  26  Iowa,  422;  Reyburn  v.  Mitchell,  106  Mo.  365,  16  S.  W. 
592;  Sexton  v.  Anderson,  95  Mo.  373,  8  S.  W.  564;  Fitzgerald  v. 
Christl,  20  N.  J.  Eq.  90;  Citizens'  Bank  v.  Williams,  128  N.  Y.  77, 
28  N.  E.  33;  Robb  v.  Stevens,  Clarke  Ch.  (N.  Y.)  191;  Darby  v. 
Gilligan,  33  W.  Va.  246,  10  S.  E.  400.  "The  partnership  creditors, 
except  when  they  are  given  the  benefit  of  the  partner's  equity,  have 
•of  themselves  no  other  claim  than  any  creditor  has  on  his  debtor's 
property.  *  *  *  The  partners  have  jointly  the  same  right  of  ab- 
solute disposition  of  their  joint  property  that  any  individual  has. 
They  may  sell  it,  pledge  it,  convert  it  into  other  forms,  divide  it 
up  among  themselves,  devote  it  to  the  payment  of  debts  or  part  of 
the  debts,  Or  exercise  other  ownership  over  it,  subject  only  to  each 
other's  rights,  and  to  the  operation  of  statutes  forbidding  voluntary 
conveyances  to  hinder  and  defraud  creditors."     Bates,  Partn.  §  824. 


22  I  AS  TO  THIRD  PERSONS. 

liar  i"  partneship,  that  no  one  can  make  a  valid  voluntary  con- 
veyance in  fraud  of  Ids  creditors.180 

All  the  partners  may,  by  their  joint  act,  dispose  of  part- 
nership property  in  liquidation  and  payment  of  a  debt  owing 
by  an  individual  member  of  the  firm  ,sl  or  for  a  debt  for 
which  they  are  jointly  liable  outside  of  the  business  of  the 
firm.182  The  trend  of  modem  authority  is  to  the  effed  thai 
the  fact  that  the  firm  is  solvent,  or  that  such  application  of 
its  assets  to  individual  debts  will  render  it  insolvent,  does  nol 
deprive  the  partners  of  their  right  to  make  such  application,, 
provided,  always,  as  already  stated,  the  partners  act  in  good 
faith,  and  not  in  fraud  of  creditors,183  and  such  a  tendency 
seems  in  harmony  with  the  modern  authorities  repudiating 
the  so-called  trust  fund  doctrine  as  applied  to  corporations. 

iso  Purple  v.  Farrington,  119  Ind.  164,  21  N.  E.  543;  Sexton  v.  An- 
derson, 95  Mo.  381;  Robinson  v.  Allen,  85  Va.  721;  Bonwit  v.  Hey- 
man,  43  Neb.  537,  61  N.  W.  716. 

isj  Fisher  v.  Syfers,  109  Ind.  514,  10  N.  E.  306;  Assignment  of 
Stewart.  62  Iowa,  614,  17  N.  W.  897;  Woodmansie  v.  Holcomb,  34 
Kan.  35,  7  Pac.  603;  SchmJiUapp  v^  Currie.  55  Miss.  597.:  Sexton  v. 
Anderson,  95  Mo.  373,  8  S.  W.  564;  Bernheimer  v.  Rindskopf,  116 
N.  Y.  428,  22  N.  E.  1074;  Snodgrass'  Appeal,  13  Pa.  471;  Hage  v. 
Campbell,  78  Wis.  572,  47  N.  W.  179,  Mechem's  Cases,  453;  Case  v. 
Beauregard,  99  U.  S.  119,  Mechem's  Cases,  440,  Ames'  Cas.  246. 

182  Saunders  v.  Reilly,  105  N.  Y.  12,  12  N.  E.  170,  Burdick's  Cases, 
277;  Rouss  v.  Wallace,  10  Colo.  App.  93;  Hoare  v.  Oriental  Bank 
Corp.,  2  App.  Cas.  589;  Citizens'  Nat.  Bank  v.  Wehrle,- 9  Ohio  Dec. 
330. 

183  Singer  v.  Carpenter,  125  111.  117,  17  N.  E.  761;  Hargadine-Mc- 
Kittrick  Dry  Goods  Co.  v.  Belt,  74  111.  App.  581;  Purple  v.  Farring- 
ton, 119  Ind.  164,  21  N.  E.  543;  Johnston  v.  Robuck,  104  Iowa,  523, 
73  N.  W.  1062;  Hanover  Nat.  Bank  v.  Klein,  64  Miss.  141,  8  So.  208; 
Goddard-Peck  Grocery  Co.  v.  McCune,  122  Mo.  426,  25  S.  W.  904, 
Mechem's  Cases,  457  (overruling  Phelps  v.  McNeely,  66  Mo.  555); 
Seger's  Sons  v.  Thomas  Bros.,  107  Mo.  635,  18  S.  W.  33;  Wilcox  v. 
Kellogg.  11  Ohio,  394;  Anderson  v.  Norton,  15  Lea  (Tenn.)  14; 
Carver  Gin  &  Mach.  Co.  v.  Bannon,  85  Tenn.  712,  4  S.  W.  831;  Huis- 
kamp  v.  Moline  Wagon  Co.,  121  U.  S.  310;  Kincaid  v.  National  Bank 
Paper  Co.,  63  Kan.  288,  65  Pac.  247,  54  L.  R.  A.  412. 


*-... 


APPLICATION  OF  ASSETS.  225 

There  is  considerable  authority,  however,  for  the  veiw  that  a 
transfer  of  partnership  property  by  one  partner  with  the  con- 
sent of  the  other  partners,  or  by  all  the  partners,  to  pay  in- 
dividual debts,  is  fraudulent  and  void  as  to  firm  creditors,  un- 
ma miner  to  pay  the  partnership  debts.184 

Even  if  solvent,  the  firm  may  sell  any  of  its  property  ana 
.convey  a  good  title  to  the  purchaser  free  from  the  claim  of 
^  less  the  firm  was  then  solvent,  and  had  sufficient  property  re^x 
-  firm  creditors.185 

The  partners  may,  by  mutual  agreement,  as  by  the  sale  of 
one  partner's  interest  to  his  copartner,  convert  the  partner- 
ship property  into  individual  property,  and  thereby  defeat 
the  priority  of  firm  creditors,186  and  it  is  immaterial  whether 

is4Bartlett  v.  Meyer-Schmidt  Grocer  Co.,  65  Ark.  290,  45  S.  W. 
1.063;  Teague  v.  Lindsey,  106  Ala.  266,  17  So.  538,  Burdick's  Cases, 
207;  Patterson  v.  Seaton,  70  Iowa,  689,  33  N.  W.  228;  Franklin  Sugar 
Refining  Co.  v.  Henderson,  86  Md.  452,  38  Atl.  991;  Jackson  Bank  v. 
Durfey,  72  Miss.  971,  18  So.  456,  Burdick's  Cases,  201;  Heineman  v. 
Hart,  55  Mich.  64,  20  N.  W.  792;  Bannister  v.  Miller,  54  N.  J.  Eq. 
121,  32  Atl.  1066,  Burdick's  Cases,  207;  Clements  v.  Jessup,  36  N.  J. 
Eq.  569;  Arnold  v.  Hagerman,  45  N.  J.  Eq.  186,  17  Atl.  93,  Mechem's 
Cases,  446;  Bergman  v.  Jones,  10  N.  D.  520,  88  N.  W.  284,  88  Am.  St. 
Rep.  739;  Bulger  v.  Rosa,  119  N.  Y.  459,  24  N.  E.  853;  Wilson  v.  Rob- 
ertson, 21  N.  Y.  587;  Menagh  v.  Whitwell,  52  N.  Y.  146,  Burdick's 
Cases,  222,  Ames'  Cas.  229;  Wiggins  v.  Blackshear,  86  Tex.  670,  26 
S.  W.  939,  Burdick's  Cases,  198;  Darby  v.  Gilligan,  33  W.  Va.  246, 
10  S.  E.  400.  Compare  Nordlinger  v.  Anderson,  123  N.  Y.  544,  25 
N.  E.  992;   Bernheimer  v.  Rindskopf,  116  N.  Y.  428,  22  N.  E.  1074. 

iss  Saunders  v.  Reilly,  105  N.  Y.  12,  12  N.  E.  170,  Burdick's  Cases, 
277. 

isc  Mayer  v.  Clark,  40  Ala.  259;  Levy  v.  Williams,  79  Ala.  171; 
Schleicher  v.  Walker,  28  Fla.  680,  10  So.  33;  Ladd  v.  Griswold,  9  111. 
25;  Singer  v.  Carpenter,  125  111.  117,  17  N.  E.  761;  City  of  Maquo- 
keta  v.  Willey,  35  Iowa,  323;  Woodmansie  v.  Holcomb,  34  Kan.  35, 
7  Pac.  603;  Wilson  v.  Soper,  13  B.  Mon.  (Ky.)  411;  Griffith  v.  Buck, 
13  Md.  102;  Robb  v.  Mudge,  14  Gray  (Mass.)  534;  MafByn  v.  Hatha- 
way, 106  Mass.  414;  Schmidlapp  v.  Currie,  55  Miss.  597;  Sexton  v. 
Anderson,  95  Mo.  373,  8  S.  W.  564;  Stanton  v.  Westover,  101  N.  Y. 
265,  4  N.  E.  529;  Menagh  v.  Whitwell,  52  N.  W.  146,  Burdick's  Cases, 
15 


226  AS  T0  THIRD  PERSONS. 

the  t i  nil  is  solvent  or  not,  provided  the  partners  act  in  good 
Eaith,18'  though  there  arc  cases  holding  that  such  a  conver- 
sion is  void,  as  being  in  fraud  of  creditors,  where  the  firm 
was  at  the  time  insolvent,  <>r  where  there  was  no  consider- 
ation,— as  where  one  partner  sells  his  interest  to  an  insolvent 
copartner  in  consideration  <>f  the  hitter's  assumption  of  the 
firms  <lcl)ts.18S  Certainly,  if  cither  partner  remains  Bolvenl 
and  in  the  jurisdiction,  or  if  the  property  remains  in  the 

222;  Dimon  v.  Hazard,  32  N.  Y.  65;  Ketchum  v.  Durkee,  1  Barb.  Ch. 
(N.  Y.)  480,  45  Am.  Dec.  412;  Holmes  v.  Hawes,  8  Ired.  Eq.  (N.  C.) 
21;  Mortley  v.  Flanagan,  38  Ohio  St.  401;  Baker's  Appeal,  21  Pa.  76; 
Waterman  v.  Hunt,  2  R.  I.  298;  Croone  v.  Bivens,  2  Head.  (Tenn.) 
339;  Case  v.  Beauregard,  99  U.  S.  119,  Mechem's  Cases,  440;  Ames' 
Cas.  246;  Ex  parte  Ruffin,  6  Ves.  119,  Burdick's  Cases,  192;  Bolton 
v.  Puller,  1  Bos.  &  P.  539,  Burdick's  Cases,  187;  In  re  Kemptner, 
L.  R.  8  Eq.  286,  Burdick's  Cases,  196.  The  court  will  readily  lay 
hold  of  any  circumstance  in  the  transaction  to  bring  back  the  prop- 
erty into  a  just  course  of  administration  among  the  general  firm 
creditors.  Accordingly,  if  the  transfer  is  executbry  prjncomplete, 
the  conversion  may  be  defeated  by  the  firm  creditors.  In  re  Fear,  4 
Deacon  &  C.  56;  Fitzgerald  v.  Christl,  20  N.  J.  Eq.  90.  Partners  may 
agree  that  any  member  may  withdraw  any  part  of  the  common 
stock.  Such  part  will  then  become  his  own.  Lefevre's  Appeal,  69 
Pa.  122.  Partners  may  divide  the  firm  property  between  them,  and 
thus  make  it  separate  property.  Spencer  v.  Jones,  92  Tex.  516,  50 
S.  W.  1118.  Where  a  firm  sells  and  transfers  its  property  to  a  cor- 
poration for  shares  of  the  corporate  stock,  and  the  stock  is  divided 
among  the  partners,  the  stock  is  not  partnership  assests.  Singer  v. 
Carpenter,  125  111.  117,  17  N.  E.  761. 

187  Allen  v.  Center  Valley  Co.,  21  Conn.  130;  Singer  v.  Carpenter, 
125  111.  117,  17  N.  E.  761;  Myers  v.  Tyson,  2  Kan.  App.  464,  43  Pac. 
91;  Howe  v.  Lawrence,  9  Cush.  (Mass.)  553;  Stanton  v.  Westover,. 
101  N.  Y.  265,  4  N.  E.  529. 

188  Smith  v.  Heineman,  118  Ala.  195,  24  So.  364;  Roop  v.  Herron, 
15  Neb.  73,  17  N.  W.  353;  Black's  Appeal,  44  Pa.  503;  Darby  v.  Gil- 
ligan,  33  W.  Va.  246;  Earle  v.  Art  Library  Pub.  Co.,  95  Fed.  544;  In 
re  Cook,  3  Biss.  122,  Fed.  Cas.  No.  3,151;  Ex  parte  Mayou,  4  De  Gex, 
J.  &  S.  664.  See  Brayton  v.  Sherman,  45  App.  Div.  58,  60  N.  Y.  Supp. 
1118.  The  case  of  Phelps  v.  McNeely,  66  Mo.  554,  took  this  view, 
but  it  has  since  been  overruled  in  Goddard-Peck  Grocery  Co.  v.  Mc- 
Cune,  122  Mo.  426,  25  S.  W.  904,  Mechem's  Cases,  457. 


APPLICATION  OF  ASSETS.  227 

hands  of  the  transferee  for  some  time,  the  transaction  can- 
not be  said  to  hinder,  delay,  or  defraud  firm  creditors,  be- 
cause, in  such  case,  the  firm  creditor  could  proceed  to  make 
his  claim  out  of  either  partner  alone  by  legal  process.189 

A  partner  may  apply  his  individual  property  to  the  pay- 
ment of  firm  debts,  for  such  debts  are  in  fact  his  debts, — so 
much  so  that,  as  has  been  seen,  firm  creditors  may  levy  an  at- 
tachment or  execution  upon  such  individual  property;190  but 
this  has  been  held  to  be  a  fraud  on  the  separate  creditors 
re  there  are  not  enough  separate  assets  left  to  pay  them.101 

Same — Application  by  Court. 

125.  At  law,  creditors  may  gain  certain  priorities  in  the  dis- 
tribution of  assets  by  superior  diligence  in  prosecuting 
their  claims. 

126.  ^In  eauitvl  the  assets  are  distributed  pro  rata  among 

the  different  classes  of  creditors  entitled  to  them. 

At  law,  a  firm  creditor  may  gain  a  priority  over  other 
firm  creditors  in  the  firm  property  by  being  the  first  to  levy 
an  attachment  or  execution  thereon.  He  may  gain  a  similar 
priority  in  individual  assets  even  over  individual  creditors 
in  the  same  manner,  for,  as  has  been  seen,  each  partner  is 
liable  in  solido  for  the  firm  debts.  A  legal  priority  once  ac- 
quired, will  be  preservd  in  a  subsequent  distribution  of  assets 
by  a  court  of  equity.102 

189  See  supra,  §  116;  Stanton  v.  Westover,  101  N.  Y.  265,  4  N.  E. 
529;  Wiggins  v.  Blackshear,  86  Tex.  665,  26  S.  W.  939,  Burdick's 
Cases,  198. 

100  Gadsden  v.  Carson,  9  Rich.  Eq.  (S.  C.)  252;  Gallagher's  Appeal, 
114  Pa.  353,  7  Atl.  237;  Newman  v.  Bagley,  16  Pick.  (Mass.)  570,  Bur- 
dick's Cases,  285. 

loiHolton  v.  Holton,  40  N.  H.  77;  O'Neil  v.  Salmon,  25  How.  Prac. 
(N.  Y.)  246;  Jackson  v.  Cornell,  1  Sandf.  Ch.  (N.  Y.)  348. 

loaSteiner  v.  Peters  Store  Co.,  19  Ala.  371,  24  So.  576;   Preston  v. 


228  AS  TO  THIRD  PERSONS. 

An  individual  creditor  may  obtain  a  priority  in  individual 
assets  by  being  firsl  with  bis  exectuon,  bu1  he  cannot  obtain 
a  corresponding  priority  in  the  firm  property,  because,  al- 
though he  may  levy  thereon,  all  he  can  sell  is  his  debtor's  in- 
terest therein,  which  is  merely  a  share  of  what  remains  after 
paying  all  the  partnership  debts,  and  the  settlement  of  the 
account  between  the  partners.193 

When  llie  assets  are  in  the  hands  of  a  court  of  equity  for 
distribution,  as  in  the  case  of  a  bill  for  a  settlement  of  the 
partnership  affairs,  an  assignment  for  the  benefit  of  creditors, 
bankruptcy,  or  the  death  of  a  partner,  no  creditor  can  ob- 
tain any  advantage  by  superior  diligence,  but  the  assets  will 
be  equally  distributed  between  creditors  of  the  same  class  ac- 
cording to  certain  rules  of  priority,  now  to  be  considered. 193a 

Colby,  117  111.  477,  4  N.  E.  375;  Adams  v.  Sturges,  55  111.  468;  Gil- 
laspy  v.  Peck,  46  Iowa,  461;  Smith  v.  Smith,  87  Iowa,  93,  54  N.  W. 
73,  43  Am.  St.  Rep.  359;  Meech  v.  Allen,  17  N.  Y.  300,  Mechem's 
Cases,  487,  Ames*  Cas.  326;  Wilder  v.  Keeler,  3  Paige,  Ch.  (N.  Y.) 
167;  Cumming's  Appeal,  25  Pa.  268;  In  re  Sandusky,  17  N.  B.  R. 
452,  Burdick's  Cases,  421,  Fed.  Cas.  No.  12,308.  A  judgment  against 
the  firm  is  a  lien  on  the  separate  real  estate  of  the  partners,  and  is 
entitled  to  priority  over  a  subsequent  judgment  in  favor  of  a  sep- 
arate creditor.     Cumming's  Appeal,  25  Pa.  268. 

las  See  ante,  §  72.  A  chattel  mortgage  on  firm  property  executed 
by  the  firm  takes  priority  over  an  execution  against  an  individual 
partner,  levied  before  the  mortgage  was  executed.  Swan  v.  Gilbert, 
175  111.  204,  51  N.  E.  604.  A  chattel  mortgage  on  one  partner's  in- 
terest to  secure  an  individual  debt  is  postponed  to  a  subsequent  ex- 
ecution in  favor  of  firm  creditors.  Daniel  v.  Crowell,  125  N.  C.  519, 
34  S.  E.  684.  A  separate  execution  is  postponed  to  a  subsequent  joint 
execution.  King's  Appeal,  9  Pa.  124;  Cooper's  Appeal,  29  Pa.  9;  Dyer 
v.  Clark,  5  Mete.  (Mass.)  562,  Ames'  Cas.  251.  If  a  separate  execution 
creditor  levy  upon  the  joint  stock,  and  the  other  partners  have  no 
equities  against  the  defendant  in  the  execution,  having  parted  with 
their  lien,  the  separate  creditor  will  take  the  proceeds  of  sale  in 
preference  to  a  subsequent  joint  execution.  York  County  Bank's 
Appeal,  32  Pa.  446. 

i»sa  See  Foster  v.  Field,  13  Old.  230,  74  Pac.  190;  Adams  v.  Hack- 
ett,  7  Cal.  187;  Holmes  v.  McDowell,  15  Hun  (N.  Y.)  585,  Burdick's 
Cases,  434;  Jackson  v.  Lahee,  114  111.  287,  2  N.  E.  172. 


APPLICATION  OF  ASSETS.  229 

127.  Priorities  in  Firm  Property. — Firm  assets  must  be  ap- 
plied tojthe  discharge  of  firm  debts,  in  preference  to 

the  claims  of  the  partners  or  of  their  individual  cred- 
itors, except — 

Exceptions — 

(a)  Where  firm  assets  have  been  converted  in  good  faith 

into  separate  property. 

(b)  Where  the  separate  esta^  nt  fl  r^ffl-  h^  heen  frqnfr 

ulently  converted  to  the  use  of  the  firm. 

(c)  Where  a  partner  carries  on  a  separate  business  and 

becomes  a  creditor  in  respect  to  that  business.  a 

(d)  Where  a  partner  has  been  discharged  in  bankruptcy, 

and  has  afterwards  become  a  creditor  of  his  former 
partnership. 

128.  The  so-called  partner's  lien  is  superior  to  the  claims  of 
the  other  partners  or  their  creditors  to  any  part  of 

T^^^^^^^raMMnawMMWMMwmraMwwwiMMiiiiiiwiiiiiB  [■■.m «i.._.„.      

the  firm  assets. 

Firm  Creditors  have  Priority. 

Where  the  assets  of  a  partnership  are  in  the  hands  of  a 
court  of  equity  for  distribution  to  the  parties  entitled  thereto, 
the  rule  is  well  established  that  such  assets  must  be  first  ap- 
plied to  the  payment  of  the  firm  creditors  before  any  portion 
can  be  applied  to  the  claims  of  the  individual  partners  or 
their  creditors.104   This  priority  does  not  result  from  any  lien 

is*  Weil  v.  Jaeger,  174  111.  133,  51  N.  E.  196;  Hargadine-McKittrick 
Dry  Goods  Co.  v.  Belt.  74  111.  App.  581;  Coe  v.  Simmons  Boot  & 
Shoe  Co.,  61  111.  App.  602;  Preston  v.  Colby,  117  111.  477,  4  N.  E.  375; 
Bush  v.  Clark,  127  Mass.  Ill;  Edison  Electric  Illuminating  Co.  v. 
DeMott,  51  N.  J.  Eq.  16,  25  Atl.  952;  Wilder  v.  Keeler,  3  Paige,  Ch. 
(N.  Y.)  167;  Kirby  v.  Carpenter,  7  Barb.  (N.  Y.)  373;  Ganson  v. 
Lathrop,  25  Barb.  (N.  Y.)  455;  Payne  v.  Matthews,  6  Paige,  Ch. 
(N.  Y.)  19;  Rodgers  v.  Meranda,  7  Ohio  St.  179,  Mechem's  Cases, 
463;    In   re   Stewart,   193  Pa.   347,  44  Atl.   434;    Hoffer's  Appeal,   3 


230  AS  TO  THIRD  PERSONS. 

which  the  firm  creditors  have  upon  the  firm  assets,  because 
they  have  no  lien  on  such  assets,  any  more  than  any  simple 
creditor  lias  upon  the  property  of  his  debtor.  It  results  from 
the  lien  which  as  has  been  seen,1'"11  each  partner  has,  to  have 
the  assets  applied  first  to  the  payment  of  firm  <lehts,  and  then 
to  the  payment  of  whatever  may  he  due  him  from  the  other 
partners  <>n  partnership  account.  The  firm  creditors  arc  prac- 
tically subrogated  u>  this  lien,  and  their  right  to  a  priority 
depends  upon  it.195     This  priority  of  the  firm  creditors  ex- 

Brewst.  (Pa.)  164;  Black's  Appeal,  44  Pa.  503;  Andress  v.  Miller,  15 
Pa.  316;  Houseal's  Appeal,  45  Pa.  484;  Gordon's  Estate,  3  W.  N.  C. 
(Pa.)  410;  Frow's  Estate,  73  Pa.  459;  Amsinck  v.  Bean,  22  Wall. 
(U.  S.)  395.  But  see  U.  S.  Bankruptcy  Law  1898,  §  5  (g).  "The 
rule  is  that  a  partner  in  a  firm  against  which  a  commission  of  bank- 
ruptcy issues  shall  not  prove  in  competition  with  the  creditors  of 
the  firm,  who  are  in  fact  his  own  creditors;  shall  not  take  part 
of  the  fund  to  the  prejudice  of  those  who  are  not  only  creditors  of 
the  partnership,  but  of  himself."  Ex  parte  Sillitoe,  1  Glyn  &  J.  374, 
Ames'  Cas.  428. 

B.  &  L.  were  partners.  B.  &  L.,  as  a  partnership,  was  also  a  mem- 
ber of  two  other  firms— B.,  L.  &  S.  and  B.,  L.  S.  &  D.  The  firms  all 
failed,  and  their  property  was  attached  by  creditors.  The  creditors 
of  B.,  L.  &  S.  and  B.  L.,  S.  &  D.  obtained  the  first  attachments,  and 
placed  them  in  the  hands  of  the  sheriff,  before  the  creditors  of  B.  & 
L.  placed  theirs  in  his  hands.  The  sheriff  levied  all  the  writs  on 
the  property  in  the  order  in  which  they  were  placed  in  his  hands. 
The  sheriff  had  in  his  hands  a  sum  of  money  received  from  the  sale 
of  the  property  of  B.  &  L.  to  apply  on  the  executions  issued  on  judg- 
ments rendered  in  the  actions.  Held,  that  the  creditors  of  B.  &  L. 
were  entitled  to  the  money,  and  that,  where  a  partnership  is  com- 
posed of  two  or  more  firms,  the  creditors  of  one  of  the  firms  are  en- 
titled to  a  preference,  in  the  payment  of  their  debts  over  the  credit- 
ors of  the  whole  partnership,  out  of  the  money  or  the  proceeds  of 
the  property  of  that  firm."    Bullock  v.  Hubbard,  23  Cal.  495. 

i0->aAnte,  §  102. 

L»5  Allen  v.  Center  Valley  Co.,  21  Conn.  130,  54  Am.  Dec.  333; 
Hawk  Eye  Woolen  Mills  v.  Conklin,  26  Iowa,  422;  Saunders  v. 
Reilly,  105  N.  Y.  12,  12  N.  E.  170,  Burdick's  Cases,  277;  Foster  v. 
Barnes,  81  Pa.  377;  Bardwell  v.  Perry,  19  Vt.  292,  47  Am.  Dec.  687; 
Hapgood  v.  Cornwell,  48  111.  64;  John  Spry  Lumber  Co.  v.  Chappell, 
184  111.  539,  56  N.  E.  794;  Warren  v.  Farmer,  100  Ind.  593;  Robb  v. 


APPLICATION  OF  ASSETS.  231 

tends  to  the  case  of  a  partnership  by  estoppel,  or  holding 
out. 7  9  6  Joint  but  not  partnership  creditors  canTiotjjnjhri  jjiiij 
priority,  fur  a  partner's  lien  upon  which  this  equity  rests  (Lies 
not  extend  to  such  debts.  Accordingly,  such  debtors  are  post- 
Stevens,  Clarke,  Ch.  (N.  Y.)  191;  Ketchum  v.  Durkee,  1  Barb.  Ch. 
(N.  Y.)  480;  Lefevre's  Appeal,  69  Pa.  St.  126;  York  County  Bank's 
Appeal,  32  Pa.  446;  Doner  v.  Stauffer,  1  Pen  &  W.  (Pa.)  198,  Bur- 
dick's  Cases,  218;  Snodgrass'  Appeal,  13  Pa.  471;  Schuster  v.  Farm- 
ers' &  Merchants'  Nat.  Bank,  23  Tex.  Civ.  App.  206,  54  S.  W.  777, 
55  S.  W.  1121,  56  S.  W.  93;  Case  v.  Beauregard,  99  U.  S.  119,  Mechem's 
Cases,  440,  Ames'  Cas.  246;  Fitzpatrick  v.  Flannagan,  106  U.  S.  648; 
Ex  parte  Ruffin,  6  Ves.  127,  Burdick's  Cases,  192,  19  Eng.  Rul.  Cas. 
628.  Compare  Ferson  v.  Monroe,  1  Fost.  (N.  H.)  462;  Tenney  v. 
Johnson,  43  N.  H.  144.  In  Case  v.  Beauregard,  99  U.  S.  119,  124,  125, 
Mechem's  Cases,  440,  Mr.  Justice  Strong  stated  the  law  as  follows: 
"The  right  of  each  partner  extends  only  to  the  share  of  what  may 
remain  after  payment  of  the  debts  of  the  firm  and  a  settlement  of 
its  accounts.  Growing  out  of  the  right,  or  rather  included  in  it,  is 
the  right  to  have  the  partnership  property  applied  to  the  payment  of 
the  partnership  debts,  in  preference  to  those  of  any  individual  part- 
ner. This  is  an  equity  that  partners  have  between  themselves,  and 
in  certain  circumstances  it  inures  to  the  benefit  of  the  creditors  of 
the  firm.  The  latter  are  said  to  have  a  privilege  or  preference, 
sometimes  loosely  denominated  a  'lien,'  to  have  the  debts  due  to 
them  paid  out  of  the  assets  of  a  firm  in  course  of  liquidation,  to  the 
exclusion  of  the  creditors  of  its  several  members.  Their  equity,  how- 
ever, is  a  derivative  one.  It  is  not  held  or  enforcible  in  their  own 
right.  It  is  practically  a  subrogation  to  the  equity  of  the  individual 
partner,  to  be  made  effective  only  through  him.  Hence,  if  he  is  not 
in  a  condition  to  enforce  it,  the  creditors  of  the  firm  cannot  be." 
A  simple  creditor  of  a  firm,  although  he  has  no  lien  upon  its  assets, 
has  such  an  interest  therein  as  entitles  him  to  attack  for  fraud  a 
chattel  mortgage  executed  by  the  firm  to  other  creditors.  Taylor  v. 
Riggs,  8  Kan.  App.  323,  57  Pac.  44. 

i'"'' Van  Kleeck  v.  McCabe,  87  Mich.  599,  40  N.  W.  872;  Gibbs  v. 
Humphrey,  91  Wis.  Ill,  64  N.  W.  750,  Burdick's  Cases,  475:  Thayer 
v.  Humphrey,  91  Wis.  276,  64  N.  W.  1007,  Burdick's  Cases,  117; 
Kelly  v.  Scott,  49  N.  Y.  595.  See,  also,  Adams  v.  Albert,  155  N.  Y. 
356,  49  N.  E.  929.  Compare  Broadway  Nat.  Bank  v.  Wood,  165  Mass. 
312,  43  N.  E.  100,  Burdick's  Cases,  129;  Swann  v.  Sanborn,  4  Woods, 
625,  Fed.  Cas.  No.  13,675. 


232  AS  TO  THIRD  PERSONS. 

poned  to  the  firm  creditors.197  And  it  naturally  results  from 
the  rule  that  sale  or  mortgage  by  a  partner  conveys  only  his 
interesl  after  settlement,1978  that  the  mortgagee  of  a  part- 
ner's interest  stands  in  no  better  position.197*3 

Exceptions  l<<  Rule — Conversion  of  Firm  into  Separate  Prop- 
er! i/. 
Since  the  priority  of  linn  creditors  depends  upon  the  ex- 
istence  of  .the  partner's  lien,  if  the  partners  themselves  are 
not  in  a  condition  to  enforce  it,  the  firm  creditors  cannot,  and 
their  priority  jr  g^ne  This  is  the  case  where  the  .tjftrtners 
have  in  ffood  faith  converted  the<  firm  property  into;  separate 
property.198  The  right  of  the  partners  to  do  this  as  again st 
firm  creditors  has  been  already  considered.199      ^ 

Same — Fraudulent  Conversion  of  Individual  Property. 

Where  the  separate  property  of  a  partner  has  been  fraudu- 
lently converted  to  the  use  of  the  firm,  the  equity  of  such  part- 
ner or  of  his  creditors  to  have  its  value  restored  to  his  estate 
is  of  equal  grade  with  the  claims  of  firm  creditors.200 

197  Second  Nat.  Bank  v.  Burt,  93  N.  Y.  233;  Turner  v.  Jaycox,  40 
N.  Y.  470;  Forsyth  v.  Woods,  11  Wall.  (U.  S.)  484. 

i»7a  See  ante,  §  73. 

i»7b  Daniel  v.  dwell,  125  N.  C.  519,  34  S.  E.  684. 

ios  Case  v.  Beauregard,  99  U.  S.  119,  Mechem's  Cases,  440,  Ames' 
Cas.  246;  West  v.  Skip,  1  Ves.  Sr.  239,  19  Eng.  Rul.  Cas.  618;  Ex 
parte  Ruffin,  6  Ves.  119,  Burdick's  Cases,  192,  19  Eng.  Rul.  Cas.  618; 
Rice  v.  Barnard,  20  Vt.  479;  York  County  Bank's  Appeal,  32  Pa.  446; 
Lefevre's  Appeal,  69  Pa.  126;  Walker  v.  Eyth,  25  Pa.  216;  Robb  v. 
Stevens,  Clark,  Ch.  (N.  Y.)  191;  Sage  v.  Chollar,  21  Barb.  (N.  Y.) 
596.  Where  two  of  five  partners  assign  all  their  interest  in  the  part- 
nership property  to  the  other  three,  who  assume  the  firm  debts,  the 
firm  creditors  have  no  lien  thereon.  The  remaining  partners  may 
assign  for  the  benefit  of  their  own  creditors.  Baker's  Appeal,  21  Pa. 
76. 

i»9  See  ante,  §  124  et  seq. 

200  Bates,  Partn.  §  837;   Rodgers  v.  Meranda,  7  Ohio  St.  179,  194, 


APPLICATION  OF  ASSETS.  233 

Same — Separate  Business 

Where  a  partner  carries  on  a  business  on  his  own  account, 
either  by  himself  or  with  others,  separate  and  distinct  from 
the  business  of  the  firm,  a  claim  on  account  of  such  separate 
business  may  be  proved  in  competition  with  firm  creditors.201 
It  is  only  where  articles  of  one  trade  have  been  furnished  to 
the  other  that  the  exception  applies.202 

Same — Partners  Discharged  in  Bankruptcy. 

A  partner  who  has  become  bankrupt  and  been  discharged 
from  his  debts,  and  afterwards  becomes  a  creditor  of  his  for- 
mer firm,  may  share  with  the  firm  creditors  in  the  firm  as- 
assets.203 

Partners  are  Prior  to  Individual  Creditors. 

A  partner's  lien  extends  to  claims  for  advance-,  old.,  and 
takes  precedence  of  the  claims  of  the  individual  creditors  of 
the  other  partners.204 

Burdick's  Cases,  424,  Mechem's  Cases,  463;  Ex  parte  Sillitoe,  1  Glyn 
&  J.  374,  Ames'  Cas.  430;  Ex  parte  Kendal,  1  Rose,  71. 

201  Bates,  Partn.  §  837;  Ex  parte  Sillitoe,  1  Glyn  &  J.  374,  Ames' 
Cas.  428;  Ex  parte  Cook,  Montagu,  228,  Ames'  Cas.  432;  In  re  Buck- 
hause,  2  Low.  331,  Fed.  Cas.  No.  2,086;  Rodgers  v.  Meranda,  7  Ohio 
St.  179,  Burdick's  Cases,  424,  Mechem's  Cases,  463.  But  see  In  re 
Rieser,  19  Hun   (N.  Y.)   202. 

202  The  debt  must  grow  out  of  a  transaction  between  trade  and 
trade,  in  order  to  fall  within  the  exception.  The  mere  fact  that  a 
partner  loaned  his  firm  £100,  and  that  he  also  carried  on  a  separate 
trade,  is  not  sufficient.  Ex  parte  Sillitoe,  1  Glyn  &  J.  374,  Ames'  Cas. 
421. 

son  Bates,  Partn.  §  837. 

so*  See  ante,  §  102,  "Partner's  Lien."  See,  also,  Buchan  v.  Sum- 
ner, 2  Barb.  Ch.  (N.  Y.)  165;  Crooker  v.  Crooker,  52  Me.  267;  Hap- 
good  v.  Cornwell,  48  111.  64;  Walter  v.  Herman,  23  Ky.  L.  R.  741,  62 
S.  W.  857;  West  v.  Skip,  1  Ves.  Sr.  242,  19  Eng.  Rul.  Cas.  622.  Rep- 
resentatives of  partner  entitled  to  set  off  debts,  and  have  all  allow- 
ances before  the  separate  creditors  of  the  other  can  take  his  share; 
and  they  have  a  lien  for  such  demand.  West  v.  Skip,  1  Ves.  Sr.  239, 
19  Eng.  Rul.  Cas.  618. 


/ 


234  AS  TO  THIRD  PERSONS. 

129.     Priorities    in    Separate    Property. — Individual    assets 

must  be  applied  to  the  discharge  of  individual  debts, 
in  preference  to  firm  debts,  except — 

Exceptions — 

(a)  Irisomejurisdmiion^,    individual   creditors    have    no, 

priority  over  firm  creditors. 

(b)  Where  there  is  no  joint  estate,  and  no  living  solvent 

partner,  the  individual  creditors  have  no  priority. 

(c)  Where  there  is  a  secret  or  dormant  partner,  but  no 

ostensible  firm,  firm  creditors  may  prove  against 
either  ioint  or  separate  estate. . 

Separate  Creditors  have  Priority  in  Separate  Property.     — 

It  is  the  prevailing  rule  in  most  jurisdictions  that  the  sep- 
arate estate  of  a  partner  must  be  applied  to  the  payment  of  his 
individual  debts,  in  preference  to  the  debts  of  a  firm  of  which 
he  is  a  member, — in  short,  that  separate  creditors  have  a  pri- 
ority over  firm  creditors  in  the  distribution  of  the  separate 
estate.205     It  is  difficult,  if  not  impossible,   to   assign   any 

205  Emanuel  v.  Bird,  19  Ala.  596;  Brown  v.  Stewart,  78  111.  App. 
387;  Moline  Water  Power  &  Mfg.  Co.  v.  Webster,  26  111.  233;  Dog- 
gett  v.  Dill,  108  111.  560,  Burdick's  Cases,  495,  Mechem's  Cases,  395; 
Union  Nat.  Bank  v.  Bank  of  Commerce,  94  111.  271;  Hundley  v.  Far- 
ris,  103  Mo.  78,  15  S.  W.  312;  Davis  v.  Howell,  33  N.  J.  Eq.  72;  Bur- 
dick's Cases,  438;  Greene  v.  Butterworth,  45  N.  J.  Eq.  738,  17  Atl. 
949;  Wilder  v.  Keeler,  3  Paige  Ch.  (N.  Y.)  167;  Kirby  v.  Carpenter, 
7  Barb.  (N.  Y.)  373;  Ganson  v.  Lathrop,  25  Barb.  (N.  Y.)  455;  Payne 
v.  Matthews,  6  Paige  Ch.  (N.  Y.)  19;  Meech  v.  Allen,  17  N.  Y.  300; 
Rodgers  v.  Meranda,  7  Ohio  St.  179,  Paige's  Cas.  223,  Burdick's  Cases, 
424,  Mechem's  Cases,  463;  Black's  Appeal,  44  Pa.  503;  Lord  v.  Deven- 
dorf,  54  Wis.  491,  11  N.  W.  903;  Murrill  v.  Neill,  8  How.  (U.  S.)  414; 
Peters  v.  Bain,  133  U.  S.  670;  In  re  Estes,  3  Fed.  134;  Ex  part© 
Crowder,  2  Vern.  706.  The  United  States  bankruptcy  law  of  1898 
expressly  declares  that  the  joint  estate  must  be  applied  first  in  pay- 
ment of  joint  creditors,  and  the  separate  estate  in  payment  of  sep- 
arate creditors,  and  only  the  surplus  of  each  estate  is  to  be  applied 


APPLICATION  OF  ASSETS.  235 

sound  legal  reason  for  this  rule.206  It  really  rests  upon  con- 
siderations of  convenience  and  the  notion  that,  inasmuch  as 
firm  creditors  have  a  priority  in  firm  assets,  it  is  no  more  than 
just  that  separate  creditors  should  have  a  similar  priority  in 
separate  assets.207  It  should  be  noted,  however,  that  there 
is  not  a  similar  reason  for  the  priority,  the  firm  creditor's  pri- 
ority resting  upon  the  equity  of  the  other  partners  to  have 
the  firm  assets  applied  to  firm  debts.  But  at  all  events,  the 
rule  as  stated  prevails  in  England  and  the  majority  of  the 
states  of  this  country. 

The  rule  giving  the  separate  creditors  a  priority  over  the 
firm  creditors  in  the  distribution  of  the  separate  estate  has 
not  been  universally  adopted.  Some  courts,  recognizing  the 
indisputable  fact  that  the  firm  creditors  are  as  much  the  cred- 
itors of  a  partner  as  his  individual  creditors,  have  held  that 
firm  creditors  are  entitled  to  share  pari  passu  with  the  separ- 

in  satisfaction  of  the  other  class  of  creditors.  The  rule  has  been 
laid  down  in  almost  similar  terms,  even  in  the  absence  of  statute. 
See  Murrill  v.  Neill,  8  How.  (U.  S.)  414;  Ex  parte  Dear,  1  Ch.  Div. 
519.    And  see  cases  cited  supra,  this  note. 

Partnership  realty,  although  standing  in  the  name  of  the  indi- 
vidual members,  is  treated  in  equity  as  personalty  belonging  to  the 
firm,  and  subject  to  the  payment  of  the  partnership  debts.  Long  v. 
Slade,  121  Ala.  267,  26  So.  31;  Overholt's  Appeal,  12  Pa.  222;  Lan- 
caster Bank  v.  Myley,  13  Pa.  544.  And  see,  generally,  ante,  §§  79, 
80.  As  to  personalty  standing  in  the  name  of  one  partner,  but  in 
reality  belonging  to  the  firm,  see  New  York  Commercial  Co.  v. 
Francis,  96  Fed.  266.  The  fact  that  a  creditor  has  reduced  a  joint 
and  several  liability  for  partnership  tort  to  a  joint  judgment  does 
not  prevent  him  from  enforcing  it  against  the  separate  estate  of  the 
debtors.     In  re  Blackford,  35  App.  Div.  330. 

2ooRodgers  v.  Meranda,  7  Ohio  St.  179,  Paige's  Cas.  223,  Burdiok's 
Cases,  424,  Mechem's  Cases,  463;  Gray  v.  Chiswell,  9  Ves.  126;  Dut- 
ton  v.  Morrison,  17  Ves.  211;  Lodge  v.  Prichard,  1  De  Gex,  J.  &  S. 
613. 

*oi  Rodgers  v.  Meranda,  7  Ohio  St.  179,  180;  Paige's  Cas.  223,  Bur- 
dick's  Cases,  424,  Mechem's  Cases,  463;  Davis  v.  Howell,  33  N.  J.  Eq. 
72,  Burdick's  Cases,  438;   Ex  parte  Cook,  2  P.  Wins.  500;  Lacey  v. 


036  AS  TO  THIRD  PERSONS. 

ate  creditors  in  the  separate  estate.208  With  one  qualific- 
ation, this  rule  is  correct  on  principle.  This  qualification  is  ^ 
thai  linn  creditors  should  be  compelled  to  first  exhaust  the 
joint  estate,  after  which  they  should  be  admitted  to  share  pari 
passu  with  the  individual  creditors  in  the  whole  of  the  separ- 
ate estate.  This  rests  upon  the  equitable  doctrine  of  the 
marshalling  of  assets*?09. 

Exceptions  to  Rule — No  Join!  Estate  nor  Living  Solvent 
Partner. 
Where  there  is  no  joint  estate  and  also  no  living  solvent 
partner  to  whom  the  firm  creditors  could  resort,  the  rule  does 

not  apply,  and  both  firm  and  separate  creditors  -bare  equally 
in  the  separate  estate,210  though  some  courts  have  taken  a  con- 
trary view.211 

Tlill,  L.  R.  8  Ch.  App.  444.  The  rule  rests  upon  the  equities  of  the 
partners,  and  not  upon  the  equities  of  the  creditors.  Brown  v.  Stew- 
art, 78  111.  App.  387. 

208  Hultzer  v.  Phillips,  26  S.  C.  136,  1  S.  E.  502;  Bardwell  v.  Perry, 
19  Vt.  292,  47  Am.  Dec.  687;  Pettyjohn's  Ex'rs  v.  Woodruff's  Ex'rs,  86 
Va.  478,  10  S.  E.  715;  Ex  parte  Copland,  1  Cox,  420. 

200  Hultzer  v.  Phillips,  26  S.  C.  136,  1  S.  E.  502;  Blair  v.  Black,  31 
S.  C.  346,  9  S.  E.  1033,  Mechem's  Cases,  477;  Bardwell  v.  Perry,  19 
Vt.  292;  Adams  v.  Sturges,  55  111.  468.  In  Kentucky,  the  rule  pre- 
vailing allows  the  separate  creditors  to  make  the  same  percentage 
of  their  debts  out  of  the  separate  property  that  the  firm  creditors 
have  made  out  of  the  firm  property,  after  which  both  classes  of  cred- 
itors share  pari  passu  in  the  balance  of  the  individual  estate.  Fay- 
ette Nat.  Bank  v.  Kenney's  Assignee,  79  Ky.  133.  See,  also,  Bell  v. 
Newman,  5  Serg.  &  R.  (Pa.)  78.  But  this  rule  cannot  be  sustained 
on  principle,  any  more  than  the  rule  giving  the  separate  creditors 
an  absolute  priority.  It  is  erroneous  in  not  allowing  the  firm  cred- 
itors to  share  in  the  whole  of  the  separate  estate  after  exhausting 
the  joint  estate. 

2iopahlman  v.  Graves,  26  111.  405;  Ladd  v.  Griswold,  9  111.  25;  Cur- 
tis v.  Woodward,  58  Wis.  499,  17  N.  W.  328;   Emanuel  v.  Bird,  19 

211  Howe  v.  Lawrence,  9  Cush.  (Mass.)  553;  In  re  Gray's  Estate, 
111  N.  Y.  404,  18  N.  E.  719;  Warren  v.  Farmer,  100  Ind.  593. 


APPLICATION  OF  ASSETS.  23 7 

Same — Secret  Partnerships. 

Where  there  is  an  actual  but  not  an  ostensible  partnership, 
all  the  partners  but  one  being  secret  or  dormant,  the  joint 
creditors  have  an  election  to  proceed  against  either  the  separ- 
ate estate  of  the  ostensible  partner,  or  against  the  joint  es- 
tate. But  if  the  firm  creditors  resort  to  the  separate  estate, 
the  separate  creditors  will  be  subrogated  to  their  rights 
against  the  joint  estate.212 

130.  Individual  assets  must  be  applied  to  the  discharge  of 
individual  debts,  in  preference  to  a  debt  of  the  partner 
to  his  firm,  except — 

Exceptions — 

(a)  Where  the  debt  to  the  firm  arises  from  a  fraudulent 

conversion  of  its  property, 

(b)  Where  the  debt  is  in  respect  to  a  separate  business 

carried  on  by  the  partners. 

The  firm,  as  a  creditor  of  a  partner,  cannot  compete  with 
the  latter's  individual  creditors  in  the  separate  estate,  be- 
cause this  would,  in  effect,  allow  the  bankrupt  partner  to  com- 
pete with  his  own  creditors.213 

Ala.  596;  In  re  West,  39  Fed.  203;  Alexander  v.  Gorman,  15  R.  I. 
421,  7  Atl.  243;  McCulloh  v.  Dashiell's  Adm'r,  Har.  &  G.  (Md.)  96; 
Conrader  v.  Cohen,  (C.  C.  A.)  121  Fed.  801;  In  re  Sperry's  Estate, 
1  Ashm.  (Pa.)  347;  In  re  Lloyd,  22  Fed.  88;  Ex  parte  Hayden,  1 
Brown  Ch.  454. 

212  Elliot  v.  Stevens,  38  N.  H.  311;  Van  Valen  v.  Russell,  13  Barb. 
(N.  Y.)  590;  Ex  parte  Reid,  2  Rose,  84,  Ames'  Cas.  427;  Reynolds  v. 
Bowley,  L.  R.  2  Q.  B.  474.  But  see  Lord  v.  Baldwin,  6  Pick.  (Mass.) 
348.  Where  the  partnership  is  a  secret  one,  a  separate  creditor  of 
the  ostensible  owner  of  the  property,  who  first  levies  his  execution, 
will  be  preferred  to  a  subsequent  levy  under  an  execution  against 
the  partnership.  In  such  a  case,  equity  leaves  the  parties  to  their 
rights  at  law.  Brown's  Appeal,  17  Pa.  St.  480.  It  is  a  race  of  dili- 
gence.    Whitworth  v.  Patterson,  6  Lea  (Tenn.)   119. 

213  Harmon  v.  Clark,  13  Gray  (Mass.)  114;  Somerset  Potters  Works 


238  AS  TO  THIRD  PERSONS. 

Exceptions  to  Rule. 

Where  a  partner  is  indebted  to  his  firm  an  account  of  his 
fraudulent  conversion  of  its  property  to  his  own  use,  the  firm 
may.  to  this  extent,  share  With  the  individual  creditors  in  the 
separate  estate.21^  This  is  obviously  no  more  than  justice. 
As  lias  been  seen,  a  similar  exception  allows  a  partner  to  com- 
pete with  firm  creditors  in  the  joint  estate  under  similar  cir- 
cumstances. Another  exception  has  been  allowed  where  the 
debt  to  the  firm  grew  out  of  dealings  between  the  firm  and  the 
partner  in  respect  to  a  separate  trade  carried  on  by  the 
latter.215 

131.  Individual  assets  must  be  applied  to  the  discharge  of 
firm  debts,  in  preference  to  a  debt  to  a  copartner. 

Firm  creditors  have  a  priority  in  the  separate  estate  over  a 
partner  who  is  a  creditor  of  the  bankrupt  partner,  because 
otherwise  such  partner  would  be  competing  with  his  own 
creditors.216 

132.  Individual  assets  must  be  applied  to  the  discharge  of 
individual  debts,  in  preference  to  a  debt  of  the  partner 
to  his  copartner,  except — 

Exceptions — 

(a)  Where  there  are  nofirm  debts,  and 

(b)  Where  the  separate  estate  is  insufficient  to  pay  the 
other  separate  creditors  in  full. 

Where  there  are  both  firm  and  separate  creditors,  the  sep- 
arate assets  must  be  applied  in  payment  of  the  separate  cred- 

v.  Minot,  10  Cush.  (Mass.)  592;  In  re  Hamilton,  1  Fed.  800;  Am- 
sinck  v.  Bean,  22  Wall.  (U.  S.)  395;  Read  v.  Bailey,  3  App.  Cas.  94, 
Ames'  Cas.  409;  Ex  parte  Lodge,  1  Ves  Jr.  166,  Ames'  Cas.  394. 

-i  +  Read  v.  Bailey,  3  App.  Cas.  94;  Lacey  v.  Hill,  4  Ch.  Div.  537; 
Ex  parte  Yonge,  3  Ves.  &  B.  31;  Cowan  v.  Gill,  11  Lea  (Tenn.)  674. 

215  Ex  parte  St.  Barbe,  11  Ves.  413. 

210  Ex  parte  Carter,  2  Glyn  &  J.  233. 


APPLICATION  OF  ASSETS.  239 

itors  before  payment  to  a  copartner  who  is  also  a  separate 
creditor.217  The  reason  for  this  is  that,  if  such  partner 
shared  equally  with  the  other  separate  creditors,  the  surplus 
of  the  separate  estate,  which  alone  is  applicable  to  firm  cred- 
itors, would  be  diminished,  or,  in  other  words,  the  partner 
would  be  competing  with  the  firm,  and  therefore  his  own  cred- 
itors, which  is  never  permitted.  This  reason  does  not  exist 
where  there  are  no  firm  creditors,  as  where  all  firm  debts  have 
been  satisfied  and  discharged  in  any  manner.  Accordingly, 
in  such  a  case,  a  partner  may  share  equally  with  other  separ- 
ate creditors  in  his  debtor  partner's  separate  estate.218  So, 
also,  the  reason  fails  where  the  separate  estate  is  insufficient 
to  pay  the  other  separate  creditors  in  full,  for  in  such  case 
there  would  be  no  surplus  applicable  to  firm  creditors,  and 
hence  the  partnerJ^not_competing  with  firm  creditors.  Ac- 
cordingly, in  such  case  also,  a  partner  may  share  with  the  sep- 
arate creditors.219 

217  Hill  v.  Beach,  12  N.  J.  Eq.  31;  Ex  parte  Kendall,  17  Ves.  514, 
521;  Ex  parte  Maude,  L.  R.  2  Ch.  App.  550;  Nanson  v.  Gordon,  1 
App.  Cas.  195. 

218  Price  v.  Cavins,  50  Ind.  122;  Hill  v.  Beach,  12  N.  J.  Eq.  31; 
Payne  v.  Matthews,  6  Paige  Ch.  (N.  Y.)  19;  Scott's  Appeal,  88  Pa. 
173;  Amsinck  v.  Bean,  22  Wall.  (U.  S.)  395;  In  re  Dell,  5  Sawy.  344, 
Fed.  Cas.  No.  3,774;  Ex  parte  Andrews,  25  Ch.  Div.  505;  Ex  parte 
Crazebrook,  2  Deac.  &  C.  186;  Ex  parte  King,  17  Ves.  115.  Compare 
Ex  parte  Moore,  2  Glyn  &  J.  166. 

219  Ex  parte  Topping,  4  De  Gex,  J.  &  S.  551.  See,  also,  Payne  v. 
Matthews,  6  Paige  Ch.  (N.  Y.)  19. 

't 


Qo^  'T 


CHAPTER  X. 
ACTIONS. 

133.  Actions  in  Firm  Name. 

134.  Actions  by  the  Firm. 

135.  Disqualification  of  One  Partner  to  Sue. 

136.  Actions  against  the  Firm. 

137.  Actions  between  Partners. 

138.  Actions  between  Firms  with  a  Common  Member. 

139.  Actions  on  Individual  Obligations. 
140-141.     Suits  in  Equity. 


Actions  in  Firm  Name. 

133.     Actions   upon  firm   liabilities   or   demands   must   be 
brought  by  or  against  the  individual  partners,  except — 

Exception — In  some  states  statutes  exist  authorizing  part- 
nerships to  sue  and  be  sued  in  their  firm  name. 

In  the  absence  of  statute,  actions  by  or  against  partnerships 
must  be  brought  by  or  against  the  individual  partners  in  their 
individual  names.1  The  members  of  the  firm  are  the  real 
parties  in  interest.2 

In  a  number  of  states,  statutes  have  been  passed  authoriz- 
ing actions  to  be  brought  by  or  against  partnerships  in  their 

1  Roberts  v.  Rowan,  2  Har.  (Del.)  314;  Page  v.  Brant,  18  111.  38; 
Davis  v.  Hubbard,  4  Blackf.  (Ind.)  50;  Barber  v.  Smith,  41  Mich. 
138,  1  N.  W.  992;  Mitchell  v.  Railton,  45  Mo.  App.  273;  Lewis  v. 
Cline  (Miss.),  5  So.  112;  Crawford  v.  Collins,  45  Barb.  (N.  Y.)  269. 
In  Iowa,  in  the  absence  of  statute,  it  was  held  that  suits  might  be 
in  the  firm  name.     See  Johnson  v.  Smith,  Morris  (Iowa)  106. 

2  Mitchell  v.  Railton,  45  Mo.  App.  273. 


IN  FIRM  NAME.  241 

firm  name.3  Under  these  statutes,  suits  may  be  brought 
either  in  the  firm  name  or  in  the  name  of  the  individual  mem- 
bers.4 Proceedings  in  the  firm  name  under  these  statutes 
are  in  the  nature  of  proceedings  in  rem.5  Judgment  should 
be  entered  in  firm  name.6  These  statutes  do  not  have  the  ef- 
fect of  authorizing  suits  between  a  partner  and  his  firm,  or 
between  two  firms  with  a  common  member.7 


Actions  by  the  Firm. 

134.     All  the  partners  must  join  as  plaintiffs  in  an  action 
upon  a  cause  of  action  belonging  to  the  firm,  except — 

Exceptions — 

(a)  Dormant  and  nominal  partners  are  proper,  but  not 
necessary,  parties  plaintiff. 

(b)  Where  a  contract  is  under  seal,  only  those  partners 
named  therein  can  sue. 

(c)  A  partner  may  and  sometimes  must  sue  alone  on  con- 
1  '"  tracts  made  in  his  name. 

(d)  When  the  contract  is  a  negotiable  instrument,  only 
the   partners    named    in    the    instrument   can    sue 

thereon. 

3  See  Atlantic  Glass  Co.  v.  Paulk,  83  Ala.  404,  3  So.  800;  United 
States  Exp.  Co.  v.  Bedbury,  34  111.  459;  Abernathy  v.  Latimore,  19 
Ohio,  286;  Whitman  v.  Keith,  18  Ohio  St.  145;  City  of  Opelika  v. 
Daniel,  59  Ala.  213;  Leach  v.  Milburn  Wagon  Co.,  14  Neb.  106,  15 
N   W.  232. 

4  Harrison  v.  McCormick,  69  Cal.  616,  11  Pac.  456;  Whitman  v. 
Keith,  18  Ohio  St.  144.  An  appeal  by  a  partner  in  his  own  name  is 
not  authorized  by  a  statute  authorizing  suits  or  appeals  by  a  part- 
ner in  the  firm  name.  Kline  v.  Swift  Specific  Co.,  118  Ga.  514,  45 
S.  E.  314. 

&  Yarbrough  v.  Bush,  69  Ala.  170. 

«Wyman  v.  Stewart,  42  Ala.  163;  Storm  v.  Roberts,  54  Iowa,  677, 
7  N.  W.  124;  Hawkins  v.  Lasley,  40  Ohio  St.  37. 

■Pollock,  Partn.  p.  121.     But  see  2  Bates,  Partn.  §  903,  wherein 

16 


2  1 2  ACTIONS. 

In  an  action  upon  a  firm  contract,  all  the  persons  who  were 
partners  at  the  time  it  was  made  should  l>o  joined  as  plain- 
tiffs,8 even  after  dissolution. 8a  An  infant  partner  should  It 
joined  as  a  party  plaintiff.0  No  one  who  is  not  either  an  ac- 
tual or  an  ostensible  partner  should  be  joined  with  the  actual 
partners.10 

A  dormant  partner  may  or  may  not  be  joined  as  plaintiff 
in  a  suit,  and  the  joinder  or  omission  is  no  ground  for  abate- 
ment, non-suit,  or  writ  of  error.  In  other  words,  dormant 
partners  are  always  proper,  but  never  necessary,  parties 
plaintiff.11  Nominal  partners  are  proper,  but  not  necessary, 
parties  plaintiff.     They  may,  but  need  not,  be  joined.12 

a  contrary  opinion  is  expressed.  See,  also,  generally,  infra,  §  137 
tt  seq. 

s  American  Cent.  R.  Co.  v.  Miles,  52  111.  174;  Hyde  v.  Moxie  Nerve- 
Food  Co.,  160  Mass.  559,  36  N.  E.  585,  Burdick's  Cases,  159;  Mc- 
Donnell v.  Ford,  87  Mich.  198,  49  N.  W.  545;  Dob  v.  Halsey,  16 
Johns.  (N.  Y.)  34;  Waterbury  v.  Head,  12  N.  Y.  St.  Rep.  361;  DeWit 
v.  Lander,  72  Wis.  120,  39  N.  W.  349;  Bumpus  v  Turgeon,  98  Me. 
550,  57  Atl.  383. 

saBrann  v.  Woollacott,  129  Cal.  107,  61  Pac.  801. 

oKell  v.  Nainby,  10  Barn.  &  C.  20;  Osburn  v.  Farr,  42  Mich.  134. 

3  N.  W.  299. 

loDelise  v.  Palladino,  16  Misc.  Rep.  74,  37  N.  Y.  Supp.  705. 

ii  Lloyd  v.  Archbowle,  2  Taunt.  324;  Monroe  v.  Ezzell,  11  Ala. 
<603;  Wilson  v.  Rockland  Mfg.  Co.,  2  Har.  (Del.)  67;  Mitchell  v.  Dall, 
2  Har.  &  G.  (Md.)  159;  Warner  v.  Griswold,  8  Wend.  (N.  Y.)  666; 
Belshaw  v.  Colie,  1  E.  D.  Smith  (N.  Y.)  213;  Howe  v.  Savory,  49 
Barb.  (N.  Y.)  403;  Bird  v.  Fake,  1  Pin.  (Wis.)  290;  Desha  v.  Hol- 
land, 12  Ala.  513;  Goble  v.  Gale,  7  Blackf.  (Ind.)  218;  Howe  v. 
Savory,  51  N.  Y.  631;  Hilliker  v.  Loop,  5  Vt.  116,  26  Am.  Dec.  286. 
Compare  Secor  v.  Keller,  4  Duer  (N.  Y.)  416,  wherein  it  is  held  that 
a  dormant  partner  is  a  real  party  in  interest,  and  therefore  must 
be  joined  under  the  Code. 

i^Kell  v.  Nainby,  10  Barn.  &  C.  20;  Enix  v.  Hays,  48  Iowa,  86; 
Hatch  v.  Wood,  43  N.  H.  633;  Lewis  v.  Greider,  51  N.  Y.  231.  Where 
the  nominal  partner  is  named  in  the  contract,  he  is  a  necessary 
party  plaintiff.  Guidon  v.  Robson,  2  Camp.  302,  Ames'  Cas.  140. 
Compare  Kell  v.  Nainby,  10  Barn.  &  C.  20,  Ames'  Cas.  143;   Cox  v. 


^ 


BY  THE  FIRM.  243 

"Where  the  contract  is  made  in  the  name  of  one  partner,  but 
for  the  benefit  of  the  firm,  all  the  partners  should  join  a' 
plaintiffs  in  an  action  thereon.13  But  where  the  contract  is 
under  seal,  only  the  partner  in  whose  name  it  was  made  can 
sue  thereon.14  One  partner  may  or  must  sue  alone  upon  a 
contract  made  in  his  name  in  cases  where  an  agent  may  or 
must  sue  alone  upon  a  contract  made  for  his  principal.  "Where 
a  contract  is  made  with  one  partner  in  his  individual  capa- 
city, he  must  sue  alone  thereon,  although  he  may  have  in  fact 
been  acting  for  the  benefit  of  the  firm.15  When  the  firm  oc- 
cupies substantially  the  position  of  an  undisclosed  principal, 
the  action  may  be  brought  either  by  all  the  partners  jointly, 
or  by  the  partners  alone  in  whose  name  the  contract  was 
made.16 

•"■  It  is  a  general  rule  at  common  law  that  no  person  can  main- 

/  tain  an  action  upon  a  negotiable  instrument  except  the  parties 

Vjiamed  therein.     Even  though  the  party  entitled  upon  such 

an  instrument  is  an  agent,  the  action  must  be  brought  in  his 

name,  and  cannot  be  brought  in  the  name  of  the  principal  who 

i-   not  a  party.17     Accordingly,  where  a  negotiable  instru- 

Hubbard,  4  C.  B.  317;  Spurr  v.  Cass,  L.  R.  5  Q.  B.  656;  Bishop  v. 
Hall,  9  Gray  (Mass.)   430. 

i»  Garrett  v.  Handley,  3  Barn.  &  C.  465;  Gilbert  v.  Lichtenberg, 
98  Mich.  417,  57  N.  W.  259;  McDonnell  v.  Ford,  87  Mich.  198,  49 
N.  W.  545;  Wiley  v.  Logan,  95  N.  C.  358;  Wilson  v.  Wallace,  8  Serg. 
&  R.  (Pa.)  53;  Robbins  v.  Deveriell,  20  Wis.  142;  Badger  v.  Dae- 
nieke,  56  Wis.  678,  14  N.  W.  821. 

i*  Ex  parte  Peele,  6  Ves.  602;  Mead  v.  Tomlinson,  1  Day  (Conn.) 
148;    Faulkner  v.  Brigel,  101  Ind.  329. 

1^  Phillips  v.  Pennywit,  1  Ark.  59;  Burwitz  v.  Jeffers,  103  Mich. 
512,  61  N.  W.  784;  Barns  v.  Barrow,  61  N.  Y.  39;  Beakes  v.  Da 
Cunha,  126  N.  Y.  293,  27  N.  E.  251. 

m  Piatt  v.  Halen,  23  Wend.  (N.  Y.)  456;  Beakes  v.  Da  Cunha,  126 
N.  Y.  293,  27  N.  E.  251;  Warner  v.  Griswold,  8  Wend.  (N.  Y.)  665; 
Illinois  Cent.  R.  Co.  v.  Owens,  53  111.  391;  James  T.  Hair  Co.  v. 
Thome,  27  111.  App.  502;  Jackson  v.  Bohrman,  59  Wis.  422,  18  N.  W. 
456;  Philpott  v.  Bechtel,  104  Mich.  79,  62  N.  W.  174. 

it  Leake,  Cont.  p.  302. 


244  ACTIONS. 

menl  ta  made  payable  to  ane  partner,  although  ii  is  a  part- 
aership  transaction,  and  intended  for  the  benefil  of  the  firm, 
such  partner  must  sue  alone  I  hereon,18  unless  it  has  been 
transferred  by  endorsement  to  the  firm,  in  which  case  all  the 
partners  may  sue  jointly.11'  The  facility  with  which  negoti- 
able paper  may  be  transferred  so  as  to  authorize  the  trans- 
feree to  sue  in  his  own  name,  and  the  very  general  prevalence 
of  statutes  requiring  all  actions  to  be  brought  in  the  names 
of  the  real  parties  in  interest,  render  these  rules  of  small 
practical  importance. 

Where  a  tort  results  in  damage  to  the  firm  as  a  firm,  all  the 
partners  must  join  as  plaintiffs.20  A  partner  may  and  must 
sue  alone  for  damages  suffered  by  him  individually.21  The 
same  act  may  give  rise  to  two  causes  of  action, — one  in  favor 
of  all  the  partners  jointly  for  their  joint  damage,  and  one  in 
favor  of  each  of  the  partners  separately  to  recover  his  indi- 
vidual damage.22  In  an  action  for  defamation  of  the  firm. 
brought  by  all  the  partners  jointly,  no  recovery  can  be  had 
for  damages  suffered  by  the  partners  individually.23 

isMynderse  v.  Snook,  53. Barb.  (N.  Y.)  234;  Driver  v.  Burton,  17 
Q.  B.  989;  Bawden  v.  Howell,  3  Man.  &  G.  638;  Dicey,  Parties,  p.  153. 

i9  Pease  v.  Hirst,  10  Barn.  &  C.  122. 

sopechell  v.  Watson,  8  Mees.  &  W.  691;  Donnell  v.  Jones,  13  Ala. 
490;  Sindelare  v.  Walker,  137  111.  43,  27  N.  E.  59,  Burdick's  Cases, 
304,  Mechem's  Cases,  154;  Medbury  v.  Watson,  6  Mete.  (Mass.)  246; 
Bigelow  v.  Reynolds,  68  Mich.  344,  36  N.  W.  95;  Taylor  v.  Church, 
1  E.  D.  Smith  (N.  Y.)  279;  Saul  v.  Kruger,  9  How.  Prac.  (N.  Y.) 
569. 

2i  Story  v.  Richardson,  6  Bing.  N.  C.  123;  Rogers  v.  Raynor,  102 
Mich.  473,  60  N.  W.  980;  McCoy  v.  Brennan,  61  Mich.  362,  28  N.  W. 
129;  Calkins  v.  Smith,  48  N.  Y.  614;  Russell  v.  Lennon,  39  Wis.  570. 

^Harrison  v.  Bevington,  8  Car.  &  P.  708;  Duffy  v.  Gray,  52  Mo. 
528;   Wills  v.  Jones,  13  App.  D.  C.  482   (libel). 

23  Booth  v.  Briscoe,  2  Q.  B.  Div.  496;  Duffy  v.  Gray,  52  Mo.  528; 
Taylor  v.  Church,  1  E.  D.  Smith   (N.  Y.)   279. 


BY  THE  FIRM.  245 

Same — Disqualification  of  One  Partner  to  Sue. 

135.  All  the  partners  joined  as  plaintiffs  in  an  action  at  law 
must  be  entitled  to  recover,  or  the  action  cannot  be 
maintained. 

The  rule  is  well  settled  that  in  a  suit  at  law  all  the  plain- 
tiffs must  be  entitled  to  recover,  or  the  suit  cannot  be  main- 
tained. Accordingly,  any  matter  that  will  negative  the  rial  it 
of  one  of  the  partners  to  bring  the  suit  is  sufficient  to  defeat 
an  action  upon  a  firm  claim,  in  which  all  the  partners  must 
be  joined  as  plaintiffs.24  If,  for  example,  one  partner  has 
released  a  firm  debt  or  entered  into  an  accord  and  satisfaction, 
although  he  may  have  acted  in  fraud  of  his  copartners,  yet  a 
suit  at  law  cannot  be  maintained  by  the  firm  to  recover  such 
debt.25  So,  where  one  party  has  agreed  with  the  acceptor  of 
a  bill  to  provide  for  its  payment  at  maturity,  no  action  lies 
by  the  firm  against  the  acceptor.26     If  the  rule  were  other- 

2*  Wallace  ¥.  Kelsall,  7  Mees.  &  W.  264;  Jones  v.  Yates,  9  Barn. 
&  C.  532,  17  E.  C.  L.  241;  Richmond  v.  Heapy,  1  Starkie,  202,  2 
E.  C.  L.  83;  Johnson  v.  Peck,  3  Starkie,  66,  3  E.  C.  L.  597;  Spar- 
row v.  Chisman,  9  Barm  &  C.  241,  17  E.  C.  L.  115;  Cochran  v.  Cun- 
ningham's Ex'r,  16  Ala.  448,  50  Am.  Dec.  186;  Church  v.  First  Nat. 
Bank,  87  111.  68;  Blodgett  v.  Sleeper,  67  Me.  499;  My  rick  v.  Dame, 
9  Cush.  (Mass.)  248;  Homer  v.  Wood,  11  Cush.  (Mass.)  62;  Farley 
v  Lovell,  103  Mass.  387;  Greeley  v.  Wyeth,  10  N.  H.  15;  Weaver 
v.  Rogers,  44  N.  H.  112;  Craig  v.  Hulschizer,  34  N.  J.  Law,  363; 
Wells  v.  Mitchell,  1  Ired.  (N.  C.)  484;  Cornells  v.  Stanhope,  14 
R.  I.  97;  Estabrook  v.  Messersmith,  18  Wis.  545;  Salmon  v.  Davis, 
4  Binn.  (Pa.)  375,  5  Am.  Dec.  410;  Bank  of  Arthur  v.  Ellars,  48 
111.  App.  598. 

'-■"■  Salmon  v.  Davis,  4  Binn.  (Pa.)  375,  5  Am.  Dec.  410;  Myrick  v. 
Dame,  9  Cush.  (Mass.)  248;  Wallace  v.  Kelsall,  7  Mees.  &  W.  264; 
Cochran  v.  Cunningham's  Ex'r,  16  Ala.  418,  50  Am.  Dec.  184;  Biggs 
\.  Lawrence,  3  Term  R.  454;  Jacaud  v.  French,  12  East,  317. 

se  Richmond  v.  Heapy,  1  Starkie,  202,  2  E.  C.  L.  83;  Sparrow  v. 
Chisman,  9  Barn.  &  C.  241;  Johnson  v.  Peck,  3  Starkie,  66,  3  E.  C. 
L.  597. 


24:6  ACTIONS. 

wise,  by  the  death  of  his  copartners  the  disqualified  partner 
might  become  entitled  to  sue  alone,  which  would  be  an  absurd- 
ity.27  A  person  cannot  be  allowed,  as  a  plaintiff  in  a  court 
of  law,  to  rescind  his  own  act  by  joining  his  copartners  with 
him.28  "Whatever  relief  can  be  obtained  in  this  class  of  cases 
must  be  sought  in  a  court  of  equity.29 

This  doctrine  has  been  applied  to  cases  where  one  partner, 
for  his  own  purposes,  and  in  fraud  of  his  copartners,  has 
wrongfully  disposed  of  firm  property,  and  it  has  been  held 
that  no  action  at  law  will  lie  for  the  recovery  of  such  property, 
because  the  guilty  partner,  as  a  joint  plaintiff,  would  have  to 
allege  his  own  wrongdoing  in  order  to  recover.30  But  other 
courts  take  a  contrary  view,  and  hold  that  in  such  case  the  ti- 
tle to  the  property  has  not  passed,  because  the  partner  was  not 
acting  within  the  scope  of  his  authority,  and  that  therefore  the 
guilty  partner  is  not  seeking  to  rescind  his  own  act,  and  it  is 

27  Wallace  v.  Kelsall,  7  Mees.  &  W.  264.  "The  right  of  action 
being  joint,  if  one  of  the  coplaintiffs  dies,  the  right  then  accrues 
to  and  vests  in  the  survivor.  A  joint  action  does  not  abate  by  the 
death  of  one  of  the  plaintiffs,  nor  are  the  rigbts  of  the  parties  at 
all  changed  or  affected  thereby  in  a  court  of  law;  so  that,  in  the 
present  case,  if  the  innocent  partner  had  died,  Homer,  the  fraudu- 
lent partner,  might  maintain  this  action  alone  in  his  own  name, 
and  thus,  for  his  own  benefit,  avoid  his  own  act  by  proof  of  his 
own  misconduct,  and  recover  over  again  from  the  defendants  the 
very  debt  which  has  once  been  paid  to  him,  and  from  which  he 
has  discharged  them  in  full."  Homer  v.  "Wood,  11  Cush.   (Mass.)   65. 

2s  Sparrow  v.  Chisman,  9  Barn.  &  C.  242;  Jones  v.  Yates,  9  Barn. 
&  C.  532;  Wallace  v.  Kelsall,  7  Mees.  &  W.  273;  Homer  v.  Wood,  11 
Cush.   (Mass.)  62;  Craig  v.  Hulschizer,  34  N.  J.  Law,  363. 

29  Church  v.  First  Nat.  Bank,  87  111.  68;  Bank  of  Arthur  v.  El- 
lars,  48  111.  App.  598;  Cochran  v.  Cunningham's  Ex'r,  16  Ala.  448, 
EO  Am.  Dec.  186;  Estabrook  v.  Messersmith,  18  Wis.  545. 

so  Blodgett  v.  Sleeper,  67  Me.  499;  Farley  v.  Lovell,  103  Mass.  387; 
Homer  v.  Wood,  11  Cush.  (Mass.)  62;  Greeley  v.  Wyeth,  10  N.  H. 
15;  Weaver  v.  Rogers,  44  N.  H.  112;  Craig  v.  Hulschizer,  34  N.  J. 
Law,  363;  Wells  v.  Mitchell,  1  Ired.  (N.  C.)  484;  Cornells  v.  Stan- 
hope, 14  R.  I.  97;  Estabrook  v.  Messersmith,  18  Wis.  545;  Jones  v. 
Yates,  9  Barn.  &  C.  532.  It  is  immaterial  that  the  defendant  and 
the  guilty  partner  conspired  together  to  defraud  the  other  partners. 


AGAINST  THE  FIRM.  247 

accordingly  held  that  the  action  will  lie.31  There  is  consider- 
able confusion  and  conflict  in  the  cases  upon  this  point.  Where 
however,  a  partner  acting  in  the  course  of  his  authority  com- 
mits a  fraud  upon  a  third  person,  it  is  clear  that  such  fraud 
is  a  perfect  defense  to  an  action  by  he  firm  seeking  to  take 
advantage  of  the  transaction.32 

It  is  conceded  by  all  the  authorities  that  the  technical  ob- 
jection under  consideration  does  not  apply  to  actions  against 
partners,  and  they  may  defend  upon  the  ground  that  their  co- 
partner had  no  authority  to  bind  them.33 

Actions  Against  the  Firm. 

136.     In  actions  upon  a  firm  liability,  all  the  partners  ftfrpy?rj  --*- 
be  joined  as  defendants  except — 
Exceptions — 
(a)  Dormant  and  nominal  partners  are  proper,  but  not   , 
necessary,  parties  defendant. 

Farley  v.  Lovell,  103  Mass.  387;  Grover  v.  Smith,  165  Mass.  132,  42 
N.  E.  555.  If  a  bank  pays  out  the  money  of  a  partnership  to  one 
of  the  partners  upon  his  check,  in  fraud  of  the  rights  of  the  other 
partners,  an  action  at  law  cannot  be  maintained  in  the  firm  name 
against  the  bank,  but  resort  must  be  had  to  a  court  of  equity  for 
the  relief  of  those  partners  claiming  to  be  injured.  Church  v.  First 
Nat.  Bank,  87  111.  68;  Bank  of  Arthur  v.  Ellars,  42  111.  App.  598. 

si  Rogers  v.  Batchelor,  12  Pet.  (U.  S.)  221;  Burwell  v.  Spring- 
field, 15  Ala.  273;  Brewster  v.  Mott,  5  111.  378;  Casey  v.  Carver,  42 
111.  225;  Daniel  v.  Daniel,  9  B.  Mon.  (Ky.)  195;  Warder  v.  Newdi- 
gate,  11  B.  Mon.  (Ky.)  174;  Johnson  v.  Crichton,  56  Md.  108;  Minor 
v.  Gaw,  11  Smedes  &  M.  (Miss.)  322;  Buck  v.  Mosley,  24  Miss.  170; 
Ackley  v.  Staehlin,  56  Mo.  558;  Forney  v.  Adams,  74  Mo.  138;  Bil- 
lings v.  Meigs,  53  Barb.  (N.  Y.)  272;  Thomas  v.  Pennrich,  28  Ohio 
St.  55;  Purdy  v.  Powers,  6  Pa.  492;  Binns  v.  Waddill,  32  Grat.  (Va.) 
588;  Dob  v.  Halsey,  16  Johns.  (N.  Y.)  34;  Liberty  Sav.  Bank  v. 
Campbell,  75  Va.  534;  Viles  v.  Bangs,  36  Wis.  131;  Cotzhausen  v. 
Judd,  43  Wis.  213,  28  Am.  Rep.  539. 

82  Kilgore  v.  Bruce,  166  Mass.  136,  44  N.  E.  108. 

as  Johnson  v.  Crichton,  56  Md.  108.  And  see  the  authorities  cited 
supra,  this  section. 


24:8  ACTIONS. 

(b)  Under  statutes  making  partnership  obligations  joint 

and  several,  all  or  any  of  the  partners  may  be  sued. 

(c)  In  an  action  for  a  firm  tort,  the  partners  may  be  sued 

jointly  or  severally. 

(d)  When  a  contract  is  made  in  the  name  of  one  partner, 

such  partner  may  or  must  be  sued  alone  in  the  same 
cases  that  any  other  agent  may  or  must  be  sued 
alone  upon  a  contract  made  by  him  for  his  principal. 

In  the  absence  of  statute,  partnership  contracts  are  joint, 
and  therefore  all  partners  should  be  joined  in  an  action 
against  tlicm  upon  a  firm  contract.3'4  An  infant  partner 
should  be  joined  as  a  defendant.35 

Dormant  partners  may,  but  need  not,  be  joined  as  parties 
defendant.36  A  nominal  partner  is  ordinarily  a  proper,  but 
not  a  necessary,  party  defendant.37  Under  statutes  making 
partnership  obligations  joint  and  several,  the  action  may  be 
brought  against  any  one  or  all  of  the  partners,  at  plaintiff's 
option. 

34  Page  v.  Brant,  18  111.  37;  Sandusky  v.  Sidwell,  173  111.  493,  50 
N.  E.  1003;  Smith  v.  Canfield,  8  Mich.  493;  Le  Page  v.  McCrea,  1 
Wend.   (N.  Y.)   164;  Weil  v.  Guerin,  42  Ohio  St.  299. 

"While  each  partner  is  liable  in  solido  for  all  debts  of  the  firm, 
one  partner  cannot  be  sued  alone,  unless  he  has  by  some  act  ren- 
dered himself  severally  liable;  and  each  partner  has  a  right  to  re- 
quire all  who  are  jointly  liable  with  him  to  be  made  parties  to  a 
suit  upon  any  partnership  liability."  Cox  v.  Gille  Hardware  &  Iron 
Co.,  8  Old.  483,  58  Pac.  645. 

-•'Bethel  v.  Judge  of  Superior  Court,  57  Mich.  379,  24  N.  W.  112; 
Mason  v.  Denison,  15  Wend.  (N.  Y.)  64;  Slocum  v.  Hooker,  13  Barb. 
CN.  Y.)   536. 

scpage  v.  Brant,  18  111.  37;  Wright  v.  Herrick,  125  Mass.  154; 
Bishop  v.  Austin,  66  Mich.  515,  33  N.  W.  525;  Richardson  v.  Farmer, 
36  Mo.  35;  New  York  Dry  Dock  Co.  v.  Treadwell,  19  Wend.  (N.  Y.) 
525;  Gal  way  v.  Nordinger,  21  N.  Y.  St.  Rep.  197;  Brown  v.  Bird- 
sail,  29  Barb.  (N.  Y.)  549;  Arnold  v.  Morris,  7  Daly  (N.  Y.)  498; 
Scott  v.  Conway,  58  N.  Y.  619. 

3T  Dickinson  v.  Valpy,  10  Barn.  &  C.  140;  Wood  v.  Culen,  13  Minn. 


AGAINST  THE  FIRM.  249 

In  an  action  for  a  firm  tort,  the  partners  may  be  sued  either 
jointly  or  severally.38  This  is  true,  whether  the  tort  was 
committed  by  an  agent  or  servant  of  the  firm  in  the  course  of 
his  employment,39  or  by  one  of  the  partners  acting  within  the 
scope  of  the  partnership  business.40  A  distinction  has  been 
asserted  in  the  case  of  torts  arising  from  the  state  of  the  part- 
nership lands,  and  it  has  been  said  that  in  such  case  all  the 
partners  must  be  sued  jointly.41 

One  partner  may  or  must  be  sued  alone  on  contracts  made 
by  him  on  behalf  of  the  firm  in  the  same  cases  in  which  an 
agent  may  or  must  be  sued  on  contracts  made  by  him  on  be- 
half of  his  principal.42  An  agent,  and  therefore  a  partner, 
must  be  sued  alone  upon  a  contract  under  seal  made  in  his 
own  name,  it  being  a  rule  of  the  common  law  that  the  person 
to  be  sued  for  breach  of  a  contract  by  deed  is  the  person  1  >y 
whom  the  contract  is  expressed  by  the  deed  to  be  made.  Parol 
evidence  is  inadmissible  to  charge  other  persons.43  So, 
where  an  agent  or  partner  draws,  indorses,  or  accepts  a  bill  of 
exchange  in  his  own  name,  he  must  be  sued  thereon  alone.44 

394;  Perry  v.  Randolph,  6  Smedes  &  M.  (Miss.)  335.  Compare  Hatch 
v.  Wood,  43  N.  H.  633;  Purvis  v.  Butler,  87  Mich.  248,  49  N.  W.  564. 

38  See  Stevens  v.  Faucet,  24  111.  483;  Roberts  v.  Johnson,  58  N.  Y. 
613;  Hutton  v.  Murphy,  9  Misc.  151,  29  N.  Y.  Supp.  70;  Hyrne  v. 
Erwin,  23  S.  C.  226;  Fletcher  v.  Ingram,  46  Wis.  191,  54  N.  W.  424. 

:•■:>  Roberts  v.  Johnson,  5S  N.  Y.  613;  Stockton  v.  Frey,  4  Gill  (Md.) 
406;  Wood  v.  Luscomb,  23  Wis.  287. 

40  Stevens  v.  Faucet,  24  111.  483;  Fletcher  v.  Ingram,  46  Wis.  191, 
54  N.  W.  424;   Hyrne  v.  Erwin,  23  S.  C.  226. 

4i  Lindl.  Partn.  p.  283,  citing  Mitchell  v.  Tarbutt,  5  Term  R.  649. 

**  Dicey,  Parties,  p.  271. 

43  Briggs  v.  Partridge,  64  N.  Y.  357;  Spencer  v.  Field,  10  Wend.  87; 
Home  Library  Ass'n  v.  Witherow,  50  111.  App.  117;  Priestly  v.  Fer- 
nie,  3  Hurl.  &  C.  977;  Appleton  v.  Binks,  5  East,  148;  Firemen's  Ins. 
Co.  v.  Floss,  67  Md.  403,  10  Atl.  139;  Ward  v.  Motter,  2  Rob.  (Va.) 
536;  Brown's  Adm'r  v.  Johnson,  13  Grat.  (Va.)  651;  Gait's  Ex'r  v. 
Calland's  Ex'r,  7  Leigh  (Va.)  594. 

44  Dicey,  Parties,  p.  252;  Leadbitter  v.  Farrow,  5  Maule  &  S.  345; 
Sowerby  v.  Butcher,  2  Cromp.  &  M.  368;  Pentz  v.  Stanton,  10  Wend. 


250  ACTIONS. 

Wh.iv  the  principal's  name  does  not  appear  upon  a  bill  or 
note,  be  is  not  liable  thereon  as  a  party  to  the  instrument.45 
Where  the  person  dealing  with  one  partner  gives  credit  to 
him  exclusively,  with  knowledge  that  such  partner  is  acting 
for  his  hrm,  such  partner  may  and  must  be  sued  alone.46 
Where  a  partner  so  contracts  as  to  bind  himself  personally  as 
well  as  his  firm,  he  may  be  sued  alone  thereon,  or  all  the  part- 
ners may  be  sued  jointly.47  Where  the  partner  contracting 
was  the  only  known  principal,  but  the  contract  was  in  fact 
made  for  the  benefit  of  the  firm,  it  being  the  undisclosed  prin- 
cipal, the  other  contracting  party  has  an  option  to  sue  such 
partner  alone,  or  to  sue  all  the  partners  jointly.48 


Actions  Between  Partners. 

137.     No  action  at  law  lies  between  partners  to  enforce  an, 

obligation  between  the  firm  and  a  partner^xcept — 
Exceptions — This  rule  has  been  held  not  to  apply_in  the_ 
folio-wing  casesj 
(a)  Where  the  partnership  was  for  a  single  completed 
transaction. 

(N.  Y.)  276;  Williams  v.  Robbins,  16  Gray  (Mass.)  77;  Bickford  v. 
First  Nat.  Bank,  42  111.  238;  Anderton  v.  Shoup,  17  Ohio  St.  125; 
Moss  v.  Livingston,  4  N.  Y.  208;  Prentiss  v.  Foster,  28  Vt.  742;  Ward 
v    Motter,  2  R.  (Va.)  555;  Eastwood  v.  Bain,  3  Hurl.  &  N.  738. 

46  Dicey,  Parties,  p.  253. 

•"'•  Dicey,  Parties,  p.  253,  citing  Addison  v.  Gandassequi,  4  Taunt. 
573,  2  Smith,  Lead.  Cas.  (8th  ed.)  392,  and  Thomson  v.  Davenport, 
9  Barn.  &  C.  78,  2  Smith,  Lead.  Cas.  (8th  ed.)  398.  See,  also,  Gates 
v.  Watson,  54  Mo.  585;  Clark  v.  Amoskeag  Mfg.  Co.,  62  N.  H.  612; 
Watt  v.  Kirby,  15  111.  200. 

•»"  Dicey,  Parties,  p.  254,  citing  Williamson  v.  Barton,  31  L.  J. 
Exch.  174,  per  Branwell,  B. 

*8  Dicey,  Parties,  p.  256;  Leslie  v.  Wiley,  47  N.  Y.  648;  Woodhouse 
v.  Duncan,  106  N.  Y.  533,  534,  13  N.  E.  334;  Hagar  v.  Stone,  20  Vt. 
106;  Sylvester  v.  Smith,  9  Mass.  119;  Cowles  v.  Robinson,  11  Colo. 
587. 


BETWEEN  PARTNERS.  251 

(b)  Where  there  is  but  a  single  unadjusted  item  of  ac- 

counts* 

(c)  Where  the  action  is  to  recover  a  final  balance  after 

termination  of  the  partnership . 

It  is  a  well-settled  rule  that  no  action  will  lie  in  favor  of 
one  partner  against  his  copartner  upon  a  demand  of  the  firm 
against  such  partner,  or  upon  a  liability  of  the  firm  to  a  part- 
ner.49 The  reason  usually  given  for  this  rule  is  that,  as  part- 
nerships rights  and  liabilities  are  joint,  a  partner  would  have 
to  be  joined  both  as  plaintiff  and  as  defendant  and  would 
thus  be  suing  himself,  which  would  be  an  anomaly.50  The 
real  reason  for  the  rule  is  that,  until  an  accounting  and  set- 
tlement of  the  partnership  affairs  is  had,  there  is  no  cause  of 
action  between  partners  arising  out  of  the  partnership  trans- 
actions, except  an  equitable  action  for  an  accounting.  The 
relation  of  debtor  and  creditor  does  not  exist  between  partners, 
or  their  representatives  until  the  partnership  affairs  arc 
wound.. up  and  a  balance  struck.51  The  only  promise  implied 
by  law  from  firm  transactions  is  to  pay  the  amount  which  may 

*9  Duff  v.  Maguire,  99  Mass.  300;  Haskell  v.  Adams,  7  Pick. 
(Mass.)  59;  Carpenter  v.  Greenop,  74  Mich.  664,  42  N.  W.  276,  Me- 
chem's  Cases,  242;  Hemenway  v.  Burnham,  90  Mich.  227,  51  N.  W. 
276;  Englis  v.  Furniss,  4  E.  D.  Smith  (N.  Y.)  587;  Ferguson  v. 
Baker,  116  N.  Y.  257,  22  N.  E.  400;  Newby  v.  Harrell,  99  N.  C.  149, 
5  S.  E.  284,  Burdick's  Cases,  543;  Graham  v.  Holt,  3  Ired.  (N.  C.) 
300. 

so  See  Bracken  v.  Kennedy,  4  111.  558;  Page  v.  Thompson,  33  Ind. 
137;  Cooper  v.  Nelson,  38  Iowa,  442;  Warren  v.  Stearns,  19  Pick. 
(Mass.)  73;  Mitchell  v.  Wells,  54  Mich.  127,  19  N.  W.  777;  Burley 
v.  Harris,  8  N.  H.  233. 

si  Cole  v.  Fowler,  68  Conn.  450,  36  Atl.  807;  Martin  v.  Stubbings, 
1'0  111.  App.  381;  Russell  v.  Minnesota  Outfit,  1  Minn.  164;  Ross  v. 
Carson,  32  Mo.  App.  148;  Willis  v.  Barron,  143  Mo.  450,  45  S.  W. 
289;  Towle  v.  Meserve,  38  N.  H.  9;  Wells  v.  Mitchell,  1  Ired.  (N.  C.) 
484;  Ives  v.  Miller,  19  Barb.  (N.  Y.)  196.  "Until  such  final  settle- 
ment, the  general  rule  is  that  the  firm,  and  not  the  individual  part- 
ner, is  the  debtor;  and  in  such  case  it  cannot  be  said  correctly  that 
there  is  a  debt  from  one  partner  to  the  other."     Sprout  v.  Crowley, 


252  ACTIONS. 

be  found  due  after  an  accounting,  and  it  follows  thai  no  cause 
of  actios  cau  exist  before  such  accounting.52 

A  private  statemenl  of  account  between  the  parties  is  suf- 
ficient, and  ii  has  Keen  deemed  immaterial  in  such  case  that 
partnership  affairs  with  third  persons  were  unsettled,5 2a  and 
;i  sale  by  one  partner  to  the  other  of  all  his  interest  is  a  virtual 
accounting.5211 

The  c  ■liimon-law  action  of  account  or  account  rendered  will 
lie  between  partners,  but  this  remedy  has  been  practically 
superseded  by  a  bill  in  equity  for  an  account. 

Exceptions  to  Rule. 

The  rule  that  no  action  at  law  lies  between  partners  upon 
partnership  transactions  has  been  held  not_to  apply  to  a  part- 
nership for  a  single  completed  transaction.53  Xor  to  cases 
where  there  is  a  single  unadjusted  item  of  account.54  In 
Massachusetts,  an  action  at  law  may  be  maintained  to  recover 
a  linal  hahinflfl  after  the  term jnj ti *  of  the  panncr-hip  in  aJ] 
cases  where  the  recovery  will  effect  a  final  settlement  between 
\\\r  partners^5 

30  Wis.  191;  citing  Ives  v.  Miller,  19  Barb.  (N.  Y.)  196,  and  cases 
cited. 

B2Mickle  v.  Peet,  43  Conn.  66;  Bank  of  British  North  America  v. 
Delafleld,  126  N.  Y.  410,  27  N.  E.  797;  Crater  v.  Bininger,  45  N.  Y. 
545. 

,62a  McDowell  v.  North,  24  Ind.  App.  435,  55  N.  E.  789.  And  see 
Burns  v.  Nottingham,  60  111. 

62b  Schlicher  v.  Vogel,  59  N.  J.  Eq.  351,  47  Atl.  448;  Cobb  v.  Bene- 
dict, 27  Colo.  342,  62  Pac.  222. 

Myers  v.  Winn,  16  111.  135;  Lawrence  v.  Clark,  9  Dana  (Ky.) 
257;  Rankin  v.  Fairley,  29  Mo.  App.  587;  Kutz  v.  Dreibelbis,  126  Pa. 
335,  17  Atl.  609;  Meason  v.  Kaine,  63  Pa.  335.  Contra,  Attwater  v. 
Fowler,  1  Hall  (N.  Y.)   180;  Price  v.  Drew,  18  Fla.  670. 

r,4  Purvines  v.  Champion,  67  111.  459;  Farwell  v.  Tyler,  5  Iowa, 
535;  Fanning  v.  Chad  wick,  3  Pick.  (Mass.)  420;  Bambrick  v.  Simms, 
132  Mo.  49,  33  S.  W.  445;  Byrd  v.  Fox,  8  Mo.  574;  Arnold  v.  Arnold, 
•90  N.  Y.  583. 

55  Starbuck  v.  Shaw,  10  Gray  (Mass.)  494;  Sikes  v.  Work,  6  Gray 


BETWEEN  PARTNERS.  253 

Same — Actions   Between  Firms   With   a   Common 
Member. 

138.     No^  action  at  law  lies  between  two  firms  with  a  com- 
mon  member. 

The  same  reasons  that  prohibit  actions  at  law  between  part- 
ners of  the  same  firm  forbid  actions  at  law  between  two  firms 
with  a  common  member.56  It  has  sometimes  been  held  that 
such  actions  can  be  maintained  under  the  Code,  because  the 
distinctions  between  actions  at  law  and  siiits_  in  equity  have 
been  abolished.57  But  is  is  believed  that  the  better  view  is 
that,  even  in  equity,  or  unrip r  the  Cnrl^  the  only  action  that 
can  be  maintained  between  firms  with  a  common  member,  or 
between  partners  of  the  same  firm,  is  an  action  for  an  ac- 
counting 


(Mass.)  434;  Bond  v.  Hays,  12  Mass.  34;  Capen  v.  Barrows,  1  Grar 
(Mass.)   376;   Shattuck  v.  Lawson,  10  Gray  (Mass.)   405. 

scHall  v.  Kimball,  77  111.  161;  Haven  v.  Wakefield,  39  111.  509; 
Crosby  v.  Timolat,  50  Minn.  171,  52  N.  W.  526;  Taylor  v.  Thompson, 
176  N.  Y.  168,  68  N.  E.  240;  Beacannon  v.  Liebe,  11  Or.  443,  5  Pac. 
273;  Rogers  v.  Rogers,  5  Ired.  Eq.  (N.  C.)  31;  Tassey  v.  Church,  6 
Watts  &  S.  (Pa.)  467. 

sTCole  v.  Reynolds,  18  N.  Y.  74;  Mangels  v.  Shaen,  21  App.  Div. 
507,  48  N.  Y.  Supp.  526;  Schnaier  v.  Schmidt,  59  Hun,  625,  13  N.  Y. 
Supp.  725,  affirmed  128  N.  Y.  683,  26  N.  E.  149;  Beacannon  v.  Liebe, 
11  Or.  445,  5  Pac.  273. 

■w  Page  v.  Thompson,  33  Ind.  137;  Russell  v.  Minnesota  Outfit,  1 
Minn.  162;  Crosby  v.  Timolat,  50  Minn.  171,  52  N.  W.  526;  Englis 
v.  Furniss,  4  E.  D.  Smith  (N.  Y.)  587;  Rogers  v.  Rogers,  5  Ired.  Eq. 
(N.  C.)  31.  In  Pennsylvania,  it  is  expressly  provided  by  statute  that 
actions  at  law  may  be  maintained  between  firms  having  a  common 
member,  but  even  this  statute  has  not  removed  the  inherent  objec- 
tion to  such  suits,  nor  obviated  the  necessity  of  an  accounting.  See 
Tassey  v.  Church,  6  Watts  &  S.  (Pa.)  465:  Pennock  v.  Swayne,  6 
Watts  &  S.  (Pa.)  239;  Allen  v.  Erie  City  Bank,  57  Pa.  140. 


254  ACTIONS. 


Same — Actions  on  Individual  Obligations. 

139.     An  action  _at  law  will  lie  between  partners  upon  jn_-^ 
dividual  obligations. 

The  rule  forbidding  actions  between  partners  upon  firm 
transactions  has  no  application,  of  course,  to  cases  where  the 
right  and  liabilities  sought  to  be  enforced  are  not  firm  rights 
and  liabilities,  but  are  the  individual  rights  and  liabilities  of 
the  partners.  The  mere  fact  that  the  transaction  is  in  some 
way  connected  with  the  partnership  does  not  constitute  it  a 
partnership  transaction,  within  the  meaning  of  the  rule.  Af- 
ter a  final  settlement  and  ascertainment  of  a  balance,  the 
rights  and  liabilities  thereunder  are  individual  rights  and  lia- 
bilities, and  a  partner  may  maintain  an  action  at  law  against 
his  copartner  to  recover  his  share.59  Actions  at  law  may  be 
maintained  upon  individual  contracts  made  between  the  part- 
ners either  before,  after,  or  during  the  existence  of  the  part- 
nership.60 

59  Purvines  v.  Champion,  67  111.  459;  Thompson  v.  Smith,  82  Iowa, 
598,  48  N.  W.  988;  Miner  v.  Lorman,  59  Mich.  480,  26  N.  W.  678; 
Bambrick  v.  Simms,  132  Mo.  48,  33  S.  W.  445;  Arnold  v.  Arnold,  90 
N.  Y.  583;  Blanchard  v.  Jefferson,  13  App.  Div.  314,  43  N.  Y.  Supp. 
152;  Rose  v.  Bradley,  91  Wis.  619,  65  N.  W.  509. 

eopenn  v.  Stone,  10  Ala.  209;  Wells  v.  Carpenter,  65  111.  447; 
Berry  v.  DeBruyn,  77  111.  App.  359;  Douthit  v.  Douthit,  133  Ind.  26; 
Y/illiams  v.  Henshaw,  11  Pick.  (Mass.)  79;  Ryder  v.  Wilcox,  103 
Mass.  24,  Burdick's  Cases,  525;  Kinney  v.  Robison,  52  Mich.  389, 
18  N.  W.  120;  Crater  v.  Bininger,  45  N.  Y.  545;  Bank  of  British 
North  America  v.  Delafield,  126  N.  Y.  410,  27  N.  E.  797.  Thus,  an 
action  lies  for  fraud  in  inducing  the  plaintiff  to  enter  into  partner- 
ship with  the  defendant.  Hale  v.  Wilson,  112  Mass.  444;  Rice  v. 
Culver,  32  N.  J.  Eq.  601;  More  v.  Rand,  60  N.  Y.  208.  Or  to  recover 
money  paid  under  an  executory  agreement  to  form  a  partnership 
which  has  been  broken.  Lampert  v.  Ravid,  33  Misc.  115,  67  N.  Y. 
Supp.  82.  A  partner  may  maintain  an  action  at  law  against  his 
former  co-partner  to  recover  price  of  his  interest,  sold  to  the  latter. 


BETWEEN  PARTNERS.  255 

Liability  of  one  partner  to  another  for  breach  of  the  part- 
nership agreement  is  not  an  individual  indebtedness  within 
this  rule,603-  but  breach  of  an  agreement  to  form  a  partnership 
is.60D  Nor  is  the  claim  of  a  partner  to  contribution  or  indem- 
nity for  money  advanced  for  finn  purposes  ordinarily  deemed 
individual,600  but  one  partner  may  advance  the  share  of  an- 

Burney  v.  Boone,  32  Ala.  486;  Edens  v.  Williams,  36  111.  252.  An 
action  at  law  lies  for  breach  of  an  agreement  to  enter  into  partner- 
ship with  the  plaintiff.  Hill  v.  Palmer,  56  Wis.  123,  14  N.  W.  123, 
Mechem's  Cases,  249.  An  action  at  law  lies  for  a  wrongful  dissolu- 
tion of  a  partnership  in  breach  of  the  partnership  agreement.  Jewett 
v.  Brooks,  134  Mass.  505;  Bagley  v.  Smith,  10  N.  Y.  489;  Dart  v. 
Laimbeer,  107  N.  Y.  664,  14  N.  E.  291.  An  action  lies  upon  a  prom- 
issory note  between  partners  as  individuals.  Berry  v.  DeBruyn,  77 
"ill.  App.  359;  Mitchell  v.  Wells,  4  Mich.  127;  First  Nat.  Bank  v. 
Wood,  128  N.  Y.  35,  27  N.  E.  1020.  "One  partner  may  sue  another 
on  a  note  given  to  him  for  a  sufficient  consideration  though  growing 
out  of  partnership  business."  Hey  v.  Harding  (Ky.),  53  S.  W.  33. 
An  action  at  law  lies  to  recover  money  advanced  to  launch  the  part- 
nership. Bull  v.  Coe,  77  Cal.  54,  18  Pac.  808;  Wright  v.  Eastman, 
44  Me.  220;  Wetherbee  v.  Potter,  99  Mass.  354;  Bates  v.  Lane,  62 
Mich.  132,  28  N.  W.  753;  Smith  v.  Kemp,  92  Mich.  357,  52  N.  W.  639; 
Gordon  v.  Boppe,  55  N.  Y.  665.  Partners  may,  by  express  agree- 
ment, separate  a  particular  transaction  from  the  firm  accounts,  and 
transform  it  into  individual  rights  and  liabilities,  whereon  an  ac- 
tion at  law  will  lie.  Stone  v.  Aldrich,  43  N.  H.  53;  Ryder  v.  Wilcox, 
103  Mass.  24,  Burdick's  Cases,  525;  Harris  v.  Harris,  39  N.  H.  52; 
Emery  v.  Wilson,  79  N.  Y.  78.  One  partner  may  sue  his  copartner 
at  law  to  recover  damages  for  individual  losses  suffered  by  him 
from  the  latter's  tort.  Newsom  v.  Pitman,  98  Ala.  526,  12  So.  412; 
Sweet  v.  Morrison,  103  N.  Y.  235,  8  N.  E.  396.  Where  a  partner 
agreed  in  the  articles  of  partnership  to  pay  an  equivalent  for  cer- 
tain services  to  be  rendered  in  the  business  by  the  others  and  after- 
wards adjusted  the  amount,  and  expressly  promised  to  pay  it,  it 
was  held  that  an  action  at  law  lay  upon  the  promise.  Paine  v. 
Thacher,  25  Wend.   (N.  Y.)  450. 

coa  Miller  v.  Freeman,  111  Ga.  654,  36  S.  E.  961. 

eobTevis  v.  Carter,  23  Ky.  L.  R.  1270,  65  S.  W.  17;  Lampert  v. 
Ravid,  33  Misc.  115,  67  N.  Y.  Supp.  82;  Buckmaster  v.  Gowen,  81 
111.  153. 

6oc  Sebastian  v.  Booneville  Academy  Co.,  22  Ky.  L.  R.  186,  56  S.  W. 
810;  Worley  v.  Smith,  26  Tex.  Civ.  App.  270,  63  S.  W.  903. 


256  ACTIONS. 

other  under  such  circumstances  thai  it  is  to  be  deemed  an  in- 
dividual loan  which  may  be  sued  on  at  law  during  the  con- 
tinuance of  the  partnership.60*5 

1M  U 
v    ,  Suits  in  Equity. 

140.  As  a  general  rule,  the  remedy_between  partners,  until 
final  settlement  of  accounts,  is  exclusively  in  equity. 

141.  The  granting;  of  equitable  remedies  in  suits  between 
partners  is  governed  by  ordinary  considerations. 

The  jurisdiction  of  equity  over  controversies  between  part- 
ners depends,  as  in  other  cases,  upon  the  absent  of  an  nr1ft=_, 
giiate  remedy  atj^wj  but  owing  to  the  intimate  and  compli- 
cated nature  of  the  partnership  relation,  the  remedy  at  law  is 
seldom  adequate,  and  consequently  the  jurisdiction  over  part- 
nership controversies  is  almost  cxelusivly  in  equity.61  As 
has  been  seen,  it  is  only  in  exceptional  cases  that  an  action  at 
law  Avill  lie  between  partners  upon  a  partnership  transaction. 

The  equity  jurisdiction  is  most  frequently  invoked  to  secure 
a  dissolution,  accoujithur  and  settlement  of  the  .aifairs  of  the 
firm. 

The  granting  of  equitable  remedies,  such  as  injunction, 
specific  performance,  and  the  appointment  of  receivers,  is  in 
the  main  governed  by  general  considerations  not  peculiar  to 
partnership ;  but  there  are  three  rules  governing  the  action  of 
a  court  of  equity  in  this  regard  which  must.be  noticed. 

The  first  rule  is  that  equity  will  not  undertake  the  manage- 
ment of  a  going  concern.     Formerly  the  rule  was  very  strictly 

ood  Farmer  v.  Putnam,  35  Misc.  32,  70  N.  Y.  Supp.  179. 

01  Mudd  v.  Bates,  73  111.  App.  576;  Wycoff  v.  Purnell,  10  Iowa,. 
332,  Mechem's  Cases,  238;  Course  v.  Prince,  1  Mill  (S.  C.)  413; 
Knowlton  v.  Reed,  38  Me.  246;  Blackwell  v.  Rankin,  7  N.  J.  Eq.  152; 
Cunningham  v.  Littlefield,  1  Edw.  Ch.  (N.  Y.)   104. 

~*  „    ^  '      ■ 

i 


SUITS  IN  EQUITY.  257 

enforced  that  a  court  of  equity  would  not  interfere  at  all  un- 
less a  dissolution  was  sought  or  had  already  taken  place. 
Thus,  under  the  old  rule,  if  a  dissolution  was  not  sought,  the 
court  would  not  decree  a  partnership  account,  nor  restrain  a 
partner  from  infringing  the  partnership  articles.  This  rule 
has  been  much  relaxed  in  modem  practice,  but  even  now  a 
court  will  not  take  the  management  of  a  going  concern  into  its 
own  hands.62  There  are  many  cases  now  in  which  an  in- 
junction,63 or  an  account  64  will  be  decreed,  although  no  dis- 
solution has  taken  place,  and  none  is  sought. 

The  second  rule  above  mentioned  is  that  a  court  of  equity 
will  not  interfere  in  matters  of  merely  internal  regulation. 

The  third  rale  is  that  equity  will  not  interfere  at  the  in- 
stance of  a  person  who  has  been  guilty  of  laches.  This  is  a 
general  principle,  applicable  to  all  suits  in  equity,  but  there 
is  a  peculiar  propriety  in  enforcing  it  in  partnership  cases. 
Especially  where  the  alleged  partnership  was  in  a  speculative 

esLindl.  Partn.  p.  465  et  seq.;  England  v.  Curling,  8  Beav.  129,  19 
Eng.  Rul.  Cas.  598;  Roberts  v.  Eberhardt,  Kay,  148,  19  Eng.  Rul. 
Cas.  607.  Where  tenants  in  common  of  a  mine  have  been  working 
it  in  partnership,  or  where  the  mine  itself  is  the  partnership  prop- 
erty, the  court  will  not  appoint  a  receiver  or  manager  at  the  in- 
stance of  one  of  the  partners,  in  a  suit  which  does  not  seek  to  dis- 
solve the  partnership.  Roberts  v.  Eberhardt,  Kay,  148,  23  L.  J.  Ch. 
201,  19  Eng.  Rul.  Cas.  607. 

«s  Pirtle  v.  Penn,  3  Dana  (Ky.)  247,  28  Am.  Dec.  70,  Mechem's 
Cases,  259;  Van  Kuren  v.  Trenton  Locomotive  &  Machine  Mfg.  Co., 
13  N.  J.  Eq.  302. 

s*  An  account  may  be  had  without  a  dissolution  in  the  following 
cases:  (1)  Where  one  partner  has  sought  to  withhold  from  his  co- 
partner the  profit  arising  from  some  secret  transaction.  (2)  Where 
the  partnership  is  for  a  term  of  years,  still  unexpired,  and  one  part- 
ner has  sought  to  exclude  or  expel  his  copartner,  or  drive  him  to  a 
dissolution.  (3)  Where  the  partnership  has  proved  a  failure,  and 
the  partners  are  too  numerous  to  be  made  parties  to  the  action,  and 
a  limited  account  will  result  in  justice  to  them  all.  (4)  Where  there 
is  an  agreement  for  periodical  accountings,  or  accountings  as  to  dis- 
tinct transactions.    Lindl.  Partn.  p.  495;  George,  Partn.  p.  337;  Pat- 

17 


258  ACTIONS. 

venture,  ;i  pci-soii  will  not  bo  permitted  to  lie  idly  by  until  it 
has  proven  successful,  ami  then  claim  a  partner's  share.05 

Specific  Performance. 

It  i-  a  general  rule  that  equity  will  not  decree  specific  per- 
formance  of  an  agreemenl  In  enter  into  and  carry  en  a  part- 
nership.66 "Il  is  impossible  to  make  persons  who  will  net 
concur  carry  on  a  business,  jointly,  for  their  own  common  ad- 
vantage."67 

AYhere  no  fixed  term  of  duration  is  provided  for  in  the  part- 
nership agreement,  a  decree  of  specific  performance  would  be 
nugatory,  for  the  partners  could  at  once  dissolve  it.  Accord- 
ingly, in  such  cases,  specific  performance  will  not  generally 
be  decreed.68 


terson  v.  Ware,  10  Ala.  444;  Traphagen  v.  Burt,  67  N.  Y.  30;  Wadley 
v.  Jones,  55  Ga.  329. 

«s  See,  generally,  Hoyt  v.  Sprague,  103  U.  S.  613;  Groenendyke  v. 
v.  Coffeen,  109  111.  325;  Norway  v.  Rowe,  19  Ves.  144;  Clegg  v.  Ed- 
monson, 8  De  Gex,  M.  &  G.  787.  In  a  business  of  a  highly  speculative 
character,  a  partner  who  stands  by  and  takes  no  decided  step  for 
assertion  of  his  rights  will  not  be  allowed,  after  a  considerable  pe- 
riod, and  when  the  success  of  the  venture  is  assured  by  the  exertions 
of  the  remaining  partners,  to  claim  his  share  of  profits  as  a  partner. 
Norway  v.  Rowe,  19  Ves.  144,  19  Eng.  Rul.  Cas.  556;  Rule  v.  Jewell, 
18  Ch.  Div.  660,  29  Weekly  Rep.  755,  19  Eng.  Rul.  Cas.  561. 

co  Scott  v.  Raymen,  L.  R.  7  Eq.  112. 

67  England  v.  Curling,  8  Beav.  138,  19  Eng.  Rul.  Cas.  604.  See, 
also,  Satterthwait  v.  Marshall,  4  Del.  Ch.  337,  354;  Reed  v.  Vidal,  5 
Rich.  Eq.  (S.  C.)  289;  Meason  v.  Kaine,  63  Pa.  335.  In  Buck  v. 
Smith,  29  Mich.  166,  the  court  said  (at  page  171):  "It  is  extremely 
plain  that  the  court  cannot  assume  to  enforce  the  performance  of 
daily  prospective  duties,  or  supervise  or  direct  in  advance  the  course 
or  conduct  of  one  who  is  to  control  and  manage  in  the  interest  of  a 
firm  in  which  he  is  to  stand  as  a  member,  and  where,  too,  the  stip- 
ulated arrangement,  as  plainly  set  forth,  contemplates  that  his  per- 
sonal skill  and  judgment  shall  be  applied  and  govern  according  to 
the  shifting  needs  of  property  and  business.  No  court  is  competent 
to  execute  such  an  arrangement." 

88  Morris  v.  Peckham,  51  Conn.  128;  Somerby  v.  Buntin,  118  Mass. 


SUITS  IN  EQUITY.  259 

The  court  may  decree  specific  performance  of  an  agreement 
to  execute  a  formal  instrument  of  partnership,  and,  so  far  as 
it  can  make  its  jurisdiction  effective,  by  injunction  or  other- 
wise, will  give  relief  in  substantially  carryhg  out  the  agree- 
ment.69 Thus,  where  it  is  necessary  in  order  to  secure  to  a 
partner  the  interests  in  property  to  which,  by  the  partnership 
agreement,  he  is  entitled,  specific  performance  to  that  extent 
may  be  decreed,  even  of  an  agreement  to  form  a  partnership  at 
will.70  And,  in  general,  an  agreement  to  convey  property 
rights  with  which  the  partnership  is  to  deal,  or  land  on  which 
the  partnership  buildings  are  to  be  erected,  Avill  be  specifically 
enforced  where  the  agreement  has  been  relied  and  acted  on. 

279,  287;  Buck  v.  Smith,  29  Mich.  166.  See,  however,  Tillar  v.  Cook, 
77  Va.  477,  481. 

co  England  v.  Curling,  8  Beav.  129,  19  Eng.  Rul.  Cas.  598;  Roberta 
v.  Eberhardt,  Kay,  148,  19  Eng.  Rul.  Cas.  607.  "But  if  the  parties  in- 
sist on  having  a  declaration  of  their  rights,  the  court  has,  over  and 
over  again,  entertained  the  jurisdiction,  and  must  entertain  the  ju- 
risdiction, unless  some  one  or  two  of  several  partners  are  to  be  per- 
mitted to  do  just  as  they  like  with  the  partnership  rights  and  inter- 
est."   England  v.  Curling,  8  Beav.  138,  19  Eng.  Rul.  Cas.  605. 

to  Somerby  v.  Buntin,  118  Mass.  279;  Whitworth  v.  Harris,  40 
Miss.  483. 


CHAPTER  XI. 
DISSOLUTION. 

142.  How  Effected.* 

143.  By  Operation  of  Law> 

144.  By  Act  of  Parties.   ' 

145.  By  Decree  of  Court,  i 

146.  Grounds  for  Dissolution.' 

147.  Rights,  Powers,  and  Liabilities  after  Dissolution. 

148.  Of  Partners  Generally. 

149.  Of  Liquidating  Partners. 

150.  Of  surviving  partners. 
151-152.        Of  Estate  of  Deceased  Partner. 

153.         Of  Creditors. 


How  Effected. 

142.     A  partnership  may  be  dissolved  in  three  ways,  viz. — 

(a)  By  operation  of  law. 

(b)  Bv  act  of  parties. 

y         (c)  By  decree  of  court. 


Same — By  Opeeation  of  Law. 

143.     A  partnership  is  dissolved  by  operation  of  law  upon 
the  happening  of  either  of  the  following  events : 

(a)  Death  of  partner 

(b)  Insolvency  or  bankruptcy  of  partner  or  firm. 

(c)  Marriage  of  feme  sole  partner,  except  where  her  dis^ 

abilities  have  been  removed  by  statute^ 

(d)  Events  rendering  continuance  of  partnership  illegal^ 


HOW  EFFECTED.  261 

Death  of  a  Partner. 

"Whether  a  partnership  is  formed  to  continue  for  a  definite 
term  or  not.  the  death  of  one  partner,  ipso  facto,  dissolves  the 
partnership  by  npprarian  ^J[^y.tpg  to. all  the  partners.1  It  is 
■  not  unusual  to  provide  in  the  original  articles  or  otherwise  for 
.  a  continuance  of  the  partnership  business,  and  in  such  case  it 
is  sometimes  loosely  said  that  the  death  of  a  partner  does  not 
dissolve  the  partnership.2  But  this  is  inaccurate.  If  the 
business  is  carried  on  under  such  arrangement,  there  is  in 
effect  and  in  law  a  new  partnership.3 

i  Pitkin  v.  Pitkin,  7  Conn.  307;  Remick  v.  Emig,  42  111.  342;  Nel- 
I  son  v.  Hayner,  66  111.  487;   Oliver  v.  Forrester,  96  111.  315;   Dyer  v. 

Clark,  5  Mete.    (Mass.)    562,  Ames'  Cas.  251;   Ames  v.  Downing,  1 

Bradf.   (N.  Y.)  321;   Dexter  v.  Dexter,  43  N.  Y.  App.  Div.  268,  60  N. 

Y.  Supp.  371;  Stewart  v.  Robinson,  115  N.  Y.  328,  22  N.  E.  160,  163; 

Durant  v.   Pierson,  124  N.  Y.  444,   26  N.  E.   1095,  Mechem's  Cases, 

403;  Egberts  v.  Wood,  3  Paige  Ch.  (N.  Y.)  517;  Griswold  v.  Wad- 
'  dington,  15  Johns.   (N.  Y.)   57,  Burdick's  Cases,  544;  Van  Kleeck  v. 

McCabe,  87  Mich.  599,  49  N.  W.  872;  Roberts  v.  Kelsey,  38  Mich.  602; 

Exchange  Bank  v.  Tracy,  77  Mo.  594;  Crawshay  v.  Maule,  1  Swanst. 

520,  19  Eng.  Rul.  Cas.  476;    Ex  parte  Ruffin,  6  Ves.  119,  Burdick's 

Cases,  192,  19  Eng.  Rul.  Cas.  628. 

2  Butler  v.  American  Toy  Co.,  46  Conn.  136;  Duffield  v.  Brainard, 
45  Conn.  424;  Rand  v.  Wright,  141  Ind.  226,  39  N.  E.  447,  Burdick's 
Cases,  266;  Roberts  v.  Kelsey,  38  Mich.  602;  Jenness  v.  Carleton,  40 
Mich.  343;  Blodgett  v.  American  Nat.  Bank,  49  Conn.  9;  Edwards  v. 
Thomas,  66  Mo.  468;  Wild  v.  Davenport,  48  N.  J.  Law,  129,  7  Atl. 
295.  See  Bates,  Partn.  §  598  et  seq.  See,  also,  expressions  of  rule 
in  cases  cited  in  preceding  note.  In  Wild  v.  Davenport,  48  N.  J. 
Law,  129,  7  Atl.  295,  the  court  say,  at  page  136:  "A  provision  in  ar- 
ticles of  partnership  that,  on  the  death  of  a  partner,  his  executor  or 
personal  representative,  or  some  other  person,  shall  be  entitled  to 
the  place  of  a  deceased  partner  in  the  firm,  with  the  capital  of  the 
deceased  in  the  firm  business,  or  some  part  of  it,  is  binding  upon 
the  surviving  partner  to  admit  the  executor,  personal  representative, 
or  nominee  of  the  deceased  partner,  but  does  not  bind  the  latter  to 
come  in.  They  have  an  option  to  come  in  or  not,  and  a  reasonable 
time  within  which  to  elect."    To  the  same  effect  are  Berry  v.  Folkes, 

JjO_Miss.  576;  Edgar  v.  Cook,  4  Ala.  588. 

3  Hoard  v.  Clum,  31  Minn.  186,  17  N.  W.  275;  Mattison  v.  Farnham, 


262  DISSOLUTION. 

Insolvency  or  Bankruptcy. 

Technical  insolvency  or  bankruptcy  of  either  an  individual 
partner  or  of  the  linn,  as  disl  inguished  from  a  more  inability 
to  pay  debts^  works  a  dissolution  of  the  partnership  by  oper- 
ation of  law;  and  an  assignmenl  for  the  benefil  of  creditors 
has  the  same  effect.4  Tf  has  been  held  thai  a  compromise 
with  creditors  and  continuation  of  business  after  a  genera] 
assignmenl  prevents  dissolution,48,  though  it  would  be  more 
accurate  to  consider  such  an  arrangement  as  the  formation  of 
a  new  partnership. lb 

Marriage  of  Female  Partner. 

At  common  law,  the  marriage  of  a  female  partner  operated 
as  ;i  dissolution,  but  un^ej^statutes  authorizing  married 
women  to  contract  and  hold  property  as  if  sole,  marriage  does 
not  have  this  effect.5  A  partnership  between  a  man  and  a  wo- 
man is  dissolved  by  their  marriage  to  each  other.6 

44  .Minn.  95,  46  N.  W.  347;  Wilcox  v.  Derickson,  168  Pa.  331,  31  Atl. 
1080. 

4McNutt  v.  King-,  59  Ala.  597;  Wells  v.  Ellis,  68  Cal.  243;  Gordon 
v.  Freeman,  11  111.  14;  Talcott  v.  Dudley,  4  Scam.  (111.)  427;  Arnold 
v.  Brown,  24  Pick.  (Mass.)  89,  35  Am.  Dec.  296;  Eustis  v.  Bolles, 
146  Mass.  413,  4  Am.  St.  Rep.  327;  Atwood  v.  Gillett,  2  Doug.  (Mich.) 
206;  Halsey  v.  Norton,  45  Miss.  703,  7  Am.  Rep.  745;  Marquand  v. 
New  York  Mfg.  Co.,  17  Johns.  (N.  Y.)  525;  Welles  v.  March,  30  N. 
Y.  344;  Havens  v.  Hussey,  5  Paige,  Ch.  (N.  Y.)  30;  Siegel  v.  Chidsey, 
28  Pa.  297;  McKelvy's  Appeal,  72  Pa.  409;  Ex  parte  Ruffin,  6  Ves. 
126,  19  Eng.  Rul.  Cas.  628.  By  an  adjudication  in  bankruptcy,  the 
partner  becomes  civiliter  mortuus  so  far  as  the  partnership  is  con- 
cerned.   Talcott  v.  Dudley,  4  Scam.  (111.)  427. 

^a  Taylor  v.  Hotchkiss,  81  App.  Div.  470,  80  N.  Y.  Supp.  1042. 

•»b  Atwood  v.  Gillett,  2  Doug.  (Mich.)  206. 

s  Brown  v.  Chancellor,  61  Tex.  437,  445.  Query:  Is  notice  of  dis- 
solution necessary?    See  Bates,  Partn.  §  588. 

«  Bassett  v.  Shepardson,  52  Mich.  3,  17  N.  W.  217,  Burdick's  Cases, 
553.  But  see  Burney  v.  Savannah  Grocery  Co.,  98  Ga.  711,  25  S.  E. 
915,  Burdick's  Cases,  11. 


HOW  EFFECTED.  263 

Business  of  Partnership  Becoming  Unlawful. 

A  partnership  is  in  every  case  dissolved  by  the  happening 
of  an  event  which  'males'  it  unlawful  f or  the  business  of  tbj3 
firm  to  be  carried  on,  or  for  the  members  of  the  firm  to  carry 
it  on  in_.partner.ship.7  Thus,  where  the  partners  are  residents 
of  different  countries,  the  breaking  out  of  war  between  such 
countries  operates  as  a  dissolution.8 


Same — By  Acts  of 


144.  A  partnership  may  be  dissolved  by  the  act  of  some  or 
all  of  the  partners.  It  is  so  dissolved  in  the  following 
cases,  viz.: 

(a)  Where  the  stipulated  term  has  expirerlT  or  the  object 

ofthe  partnership  has  heen  accomplished. 

(b)  Where  the  parties  mutually  agree  to  a  dissolution. 


# 


(c)  Whereone  partner  gives  notice  of  dissolution. 

(d)  Where  there  is  a__chanjrg  in  memberghjp. . 

(e)  Wher^_onepartner's  share  has  been_trajisferred-. 


Expiration  of  Term  or  Accomplishment  of  Object. 

Where  a  partnership  is  formed  for  a  specified  term,  and 
that  lerm  has  expire!,  (lie  partnership  is  dissolved  without 
any  further  action  upon  the  part  of  the  partners.1'  Xotice  of 
dissolution  is  necessary  to  relieve  the  partners  from  liability 
for  subsequent  acts  of  their  former  partners,  except  in  the 
case  of  persons  having  notice  of  the  term.10     The  partnership 

1  Pollock,  Partn.  art.  1.     See,  also,  Esposito  v.  Bowden,  7  El.  &  Bl. 

763. 

a 

s  Griswold  v.  Waddington,  15  Johns.  (N.  Y.)  57,  Burdick's  Cases, 
544,  16  Johns.  (N.  Y.)  438;  Buchanan  v.  Curry,  19  Johns.  (N.  Y.) 
137;  Woods  v.  Wilder,  43  N.  Y.  164;  Taylor  v.  Hutchison,  25  Grat. 
<Va.)  536;  Matthews  v.  McStea,  91  U.  S.  7. 

o  Schlater  v.  Winpenny,  75  Pa.  321;  Ex  parte  Ruffin,  6  Ves.  126, 
Burdick's  Cases,  192,  19  Eng.  Rul.  Cas.  628. 

loRetchum  v.  Clark,  6  Johns.   (N.  Y.)   144;   Holt  v.  Simmons,  16 


2Q4  DISSOLUTION. 

may,  of  course,  be  continued  after  the  expiration  of  the  orig- 
inal term,  by  express  or  tacit  agreement.11 

Where  the  partnership  was  for  the  accomplishment  of 
some  particular  transaction  or  venture,  upon  the  completion 
thereof  the  partnership  is  at  an  end.12 

Dissolution  by  Mutual  Consent. 

By  mutual  consent  of  all  the  partners,  a  partnership  may 
he  dissolved  al  any  time,  whether  it  was  formed  for  an  indef- 
inite time,  or  a  fixed  period.  .V  specific  agreement  is  ao1 
necessary  to  dissolve  a  partnership — words  or  acts  implying 
an  intention  to  dissolve  are  enough.14  Abandonment  of  the 
partnership  business  is  evidence  of  dissolution.15  Where  both 
parties  refuse  further  to  perform  the  partnership  agreement, 

Mo.  App.  97.  See,  also,  ante,  §  120,  "Notice  of  Dissolution."  The 
expiration  of  a  partnership  by  lapse  of  time  revokes  a  power  of  at- 
torney to  conduct  the  business  of  the  firm,  as  to  one  who  had  notice 
of  the  term.     Schlater  v.  Winpenny,  75  Pa.  321. 

ii  Mifflin  v.  Smith,  17  Serg.  &  R.  (Pa.)  165. 

12  Bank  of  Montreal  v.  Page,  98  111.  109;  Spurck  v.  Leonard,  9  111. 
App.  174;  Bohrer  v.  Drake,  33  Minn.  408,  23  N.  W.  840;  Jones  v. 
Jones,  18  Ohio  Cir.  Ct.  260,  10  Ohio  Dec.  71;  Sims  v.  Smith,  11  Rich. 
(S.  C.)   565. 

is  Phelps  v.  State,  109  Ga.  115,  34  S.  E.  210;  Bank  of  Montreal  v. 
Page,  98  111.  109;  Richardson  v.  Gregory,  126  111.  166,  18  N.  E.  777; 
Ligare  v.  Peacock,  109  111.  94;  Wantling  v.  Howarth,  65  111.  App.  598; 
Gould  v.  Banks,  8  Wend.  (N.  Y.)  562;  Ex  parte  Ruffin,  6  Ves.  119, 
Burdick's  Cases,  192,  19  Eng.  Rul.  Cas.  628. 

i*  Richardson  v.  Gregory,  27  111.  App.  621,  wherein  it  was  held  that 
a  dissolution  is  effected  by  merely  ceasing  to  do  business,  and  divid- 
ing the  partnership  property.  Where  it  is  agreed  that  one  who  is  to 
furnish  the  capital  is  to  have  the  right  to  withdraw  the  capital  at 
any  time  on  consent  of  another,  the  partnership  is  dissolved  by  such 
withdrawal.  Smith  v.  Vanderberg,  46  111.  34.  Loss  of  the  whole 
capital  of  a  partnership,  where  there  has  been  no  provision  made  for 
doing  business  on  credit,  works  a  dissolution  of  the  partnership. 
Van  Ness  v.  Fisher,  5  Lans.  (N.  Y.)  236. 

is  Spurck  v.  Leonard,  9  111.  App.  174;  Ligare  v.  Peacock,  109  111. 
94.     Compare  First  Nat.  Bank  v.  Strait,  75  Minn.  396,  78  N.  W.  101. 


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HOW  EFFECTED.  205 

the  partnership  is  effectually  dissolved.16  Dissolution  may 
be  shown  by  a  sale  of  the  whole  property  and  business,  al- 
though the  stipulated  term  has  not  expired.17 

Dissolution  by  Act  of  One  Partner. 

Where  a  partnership  is  formed,  but  no  definite  time  is  fixed 

.nil,  im  .nr      -■*■  |i     lllil^MtillWH  ' ii       ''""        — "   '  '"'  '-  r-nmiir  i'r  ti  -  ■ -f 

for  its  continuance,  it  is  a  partnership  at  will,  and  any  part- 


ner may  dissolve  it  at  his  pleasure, 1S  by  merely  notifying  his 
partners  that  the  partnership  between  him  and  them  is  dis- 
solved.19 A  partnership  for  the  accomplishment  of  certain 
definite  objects,  but  not  expressly  specifying  any  time  for  its 
■continuance,  is  not  a  partnership  at  will,  within  the  meaning 
of  this  rule,  but  it  is  regarded  as  a  partnership,  to  continue 

A  partnership  is  dissolved  when  it  ceases  to  do  the  business  for 
which  it  was  organized.  Potter  v.  Tolbert,  113  Mich.  486,  71  N.  W. 
S49,  Burdick's  Cases,  367. 

io  Ligare  v.  Vanderburg,  46  111.  34;  Appeal  of  Haeberly,  191  Pa. 
239,  43  Atl.  207;  Coggswell  v.  Coggswell  (N.  J.  Eq.),  40  Atl.  213; 
In  re  Account  of  Wells,  4  Lack.  Leg.  News  (Pa.)  135. 

is  Howell  v.  Harvey,  5  Ark.  270,  Mechem's  Cases,  354;  Lawrence 
v.  Robinson,  4  Colo.  567;  Blake  v.  Sweeting,  121  111.  67,  12  N.  E.  67; 
Carlton  v.  Cummins,  51  Ind.  478;  Whiting  v.  Leakin,  66  Md.  255, 
7  Atl.  688;  Fletcher  v.  Reed,  131  Mass.  312,  Burdick's  Cases,  554; 
Walker  v.  Whipple,  58  Mich.  476,  25  N.  W.  472;  Berry  v.  Folkes,  60 
Miss.  576;  McElvey  v.  Lewis,  76  N.  Y.  373;  McMahon  v.  McClernan, 
10  W.  Va.  419;  Loorya  v.  Kupperman,  25  Misc.  518,  54  N.  Y.  Supp. 
1005;  Skinner  v.  Tinker,  31  Barb.  (N.  Y.)  333;  Pine  v.  Ormsbee,  2 
Abb.  Prac.  (N.  S.;  N.  Y.)  375;  Buck  v.  Smith,  29  Mich.  166,  Mechem's 
Cases,  266;  Crawshay  v.  Maule,  1  Swanst.  508,  19  Eng.  Rul.  Cas.  473; 
Featherstonhaugh  v.  Fenwick,  17  Ves.  307,  19  Eng.  Rul.  Cas.  577; 
Peacock  v.  Peacock,  16  Ves.  49,  19  Eng.  Rul.  Cas.  549. 

io  Blake  v.  Sweeting,  121  111.  67,  12  N.  E.  67;  Avery  v.  Craig,  173 
Mass.  110,  53  N.  E.  153;  Eagle  v.  Bucher,  6  Ohio  St.  295,  67  Am.  Dee. 
342;  Abbot  v.  Johnson,  32  N.  H.  9.  A  partnership  is  dissolved,  un- 
less equity  can  interfere,  where  one  of  the  firm  takes  exclusive  pos- 
sion,  and  gives  notice  of  dissolution  to  the  others  and  the  public. 
Solomon  v.  Kirkwood,  55  Mich.  256,  21  N.  W.  336,  Burdick's  Cases, 
554,  Mechem's  Cases,  361. 


266  DISSOLUTION. 

until   its   purpose   is  accomplished,  or  the   impracticability 
thereof  demonsl  rated.20 

Where  the  partnership  is  for  a  fixed  term,  the  American 
authorities  are  by  ao  means  uniform  as  to  whether  one  part- 
ner can  effect  a  dissolution  at  will.  That  lie  cannot  was 
clearly  Judge  Story's  opinion,  as  appears  from  the  following 
passage:  "In  cases  where  the  partnership  is  by  the  agree- 
ment to  endure  for  a  Limited  period  of  time,  the  question 
"whether  it  may,  within  the  period,  be  dissolved  by  the  men1 
act  or  will  of  one  of  the  partners,  without  the  consent  of  all 
the  others,  dues  not  seem  to  he  absolutely  and  definitely  settled 
in  our  jurisprudence,  although  it  would  not  seem,  upon  prin- 
ciple, to  admit  of  any  real  doubt  or  difficulty.  Whenever  a 
stipulation  is  positively  made  that  the  partnership  shall  en- 
dure for  a  fixed  period,  or  for  a  particular  adventure  or  voy- 
age, it  would  seem  to  be  at  once  inequitable  and  injurious  to 
permit  any  partner,  at  his  mere  pleasure,  to  violate  his  en- 
gagement,  and  thereby  to  jeopard,  if  not  sacrifice,  the  whole 
objects  of  the  partnership;  for  the  success  of  the  whole  under- 
taking may  depend  upon  the  due  accomplishment  of  the  ad- 
venture or  voyage,  or  the  entire  time  may  be  required  to  put 
the  partnership  into  beneficial  operation.  It  is  no  answer  to 
say  that  such  a  violation  of  the  engagement  may  entitle  the 
injured  partners  to  a  compensation  in  damages,  for,  indepen- 
dent of  the  delay  and  uncertainty  attendant  upon  any  such 
mode  of  redress,  it  is  obvious  that  the  remedy  may  be — nay, 
must  be — in  many  cases  utterly  inadequate  and  unsatisfac- 
tory. If  there  be  any  real  and  just  ground  for  the  aban- 
donment of  the  partnership,  a  court  of  equity  is  competent  to 
administer  suitable  redress.  Bui  that  is  exceedingly  differ- 
ent from  the  right  of  the  partner,  sua  sponte,  from  mere  cap- 
rice, or  at  his  own  pleasure,  to  dissolve  the  partnership.     In 

-"Burgess  v.  Badger,  124   111.  288,  14  N.  E.  850;    Pearce  v.  Ham, 
113  U.  S.  585;  Walker  v.  Whipple,  58  Mich.  476,  25  N.  W.  472. 


HOW  EFFECTED.  267 

short,  the  opposite  doctrine,  although  perhaps  in  some  meas- 
ure countenanced  by  the  Roman  Law,  is  founded  upon  rea- 
sons exceedingly  artificial,  if  not  indefensible."  21  These 
views  have  been  adopted  by  some  courts.22  But  the  great 
weight  of  authority  is  to  the  effect  that  there  is  no  such  thing 
as  an  indissoluble  partnership,  and  that,  even  where  the  part- 
ners have  contracted  for  a  definite  term,  any  partner  may  of 
his  own  will  dissolve  the  partnership,  with  or  without  cause, 
at  any  time.23  Of  course,  if  he  should  dissolve  the  partner- 
ship before  the  expiration  of  the  agreed  term,  he  would  be 
liable  in  damages  to  his  copartners  for  breach  of  contract,24 
unless  he  had  a  valid  legal  excuse  for  not  performing  his  con- 
tract.25 But  the  partnership  would  nevertheless  be  dissolved, 
whether  rightfully  so  or  not.26  It  is  manifestly  impractic- 
al Story,  Partn.  (7th  Ed.)   §  278. 

22  Smith  v.  Mulock,  1  Rob.  (N.  Y.)  569,  1  Abb.  Prac.  (N.  S.;  N.  Y.) 
374;  Cole  v.  Moxley,  12  W.  Va.  730;  Hannaman  v.  Karrick,  9  Utah, 
236,  33  Pac.  1039;  Pearpoint  v.  Graham,  4  Wash.  C.  C.  232,  Fed.  Cas. 
No.  10,877.  See,  also,  Hartman  v.  Woehr,  18  N.  J.  Eq.  383.  One  part- 
ner cannot  take  forcible  possession  of  the  firm  property,  and  thereby 
effect  a  dissolution  of  the  partnership  before  expiration  of  the  time 
specified  in  the  agreement.  Hannaman  v.  Karrick,  9  Utah,  236,  33 
Pac.  1039. 

-'•"•Howell  v.  Harvey,  5  Ark.  270,  Mechem's  Cases,  354;  Walker  v. 
Whipple,  58  Mich.  476,  25  N.  W.  472;  Bagley  v.  Smith,  10  N.  Y.  489, 
19  How.  Prac.  (N.  Y.)  1;  Slemmer's  Appeal,  58  Pa.  168;  Kinloch  v. 
Hamlin,  2  Hill   (S.  C.)  19. 

24  Blake  v.  Dorgan,  1  G.  Greene  (Iowa)  537;  Monroe  v.  Conner,  15 
Me.  178;  Solomon  v.  Kirkwood,  55  Mich.  256,  21  N.  W.  336,  Bur- 
dick's  Cases,  554,  Mechem's  Cases,  361;  Skinner  v.  Dayton,  19  Johns. 
(N.  Y.)  513;  Slemmer's  Appeal,  58  Pa.  168;  Mason  v.  Connell,  1 
Whart.  (Pa.)  381.  Loss  of  profits  which  plaintiff  would  have  real- 
ized is  a  proper  element  of  damage.  Bagley  v.  Smith,  10  N.  Y.  489, 
Mechem's  Cases,  251. 

-•"  As  to  grounds  for  dissolution,  see  infra,  §  146. 
ze  in  Karrick  v.  Hannaman,  168  U.  S.  328,  335,  Gray,  J.,  thus  states 
the  prevailing  American  doctrine,  though  the  court  was  not  called 
upon  to  decide  the  point:   "No  partnership  can  efficiently  or  bene- 
ficially carry  on  its  business  without  the  mutual  confidence  and  co- 


268  DISSOLUTION. 

able  for  a  courl  to  compel  persons  to  become  or  remain  part- 
ners who  are  unwilling  to  do  so.  Such  a  partnership  could 
not  be  conducted  with  profit  to  those  concerned,  and  would  bo 
certain  to  resull  in  dissensions  and  Litigation.  As  has  been 
seen,  a  court  of  equity  will  not  take  charge  of  a  going  con- 
cern, and  will  not  ordinarily  decree  specific  performance  of  a 
contract  of  partnership. 

Change  in  Membership. 

"Each  change  of  partners,  whether  by  the  addition  of  a 
new  member,  or  the  death  or  retirement  of  an  old  one,  or  the 
substitution  of  a  new  for  an  old  member,  is  a  dissolution  as 
to  nil  partners,  and  not  merely  as  to  the  one  who  has  retired 
or  died,  and  whether  by  consent  or  previous  agreement  or 
otherwise,  and  if  the  business  is  continued,  it  is  by  a  new 
partnership,  whether  the  name  be  the  same  or  not.  ISTo  mat- 
ter how  numerous  the  changes  without  apparent  break  in  the 
continuity  of  the  business,  at  each  change  an  exiting  firm 
dissolves,  and  a  new  one  is  formed."27     A  change  in  name 

operation  of  all  the  partners.  Even  when,  by  the  partnership  arti- 
cles they  have  covenanted  with  each  other  that  the  partnership  shall 
continue  for  a  certain  period,  the  partnership  may  be  dissolved  at 
any  time,  at  the  will  of  any  partner,  so  far  as  to  put  an  end  to  the 
partnership  relation,  and  to  the  authority  of  each  partner  to  act  for 
all,'  but  rendering  the  partner  who  breaks  his  covenant  liable  to  an 
action  at  law  for  damages,  as  in  other  cases  of  breaches  of  contract. 
.  .  .  According  to  tbe  authorities  just  cited,  the  only  difference, 
so  far  as  concerns  the  right  of  dissolution  by  one  partner,  between 
a  partnership  for  an  indefinite  period  and  one  for  a  specified  term,  is 
this:  In  the  former  case,  the  dissolution  is  no  breach  of  the  partner- 
ship agreement,  and  affords  the  other  partner  no  ground  of  com- 
plaint. In  the  latter  case,  such  a  dissolution  before  the  expiration 
cf  the  time  stipulated  is  a  breach  of  the  agreement,  and,  as  such, 
to  be  compensated  in  damages.  But  in  either  case  the  action  of  one 
partner  does  actually  dissolve  the  partnership." 

-'"  Bates,  Partn.  §  570.  And  see  Morss  v.  Gleason,  64  N.  Y.  204; 
Peters  v.  McWilliams,  78  Va.  567;  Ross  v.  Cornell,  45  Cal.  133;  Mc- 


HOW  EFFECTED.  269 

without  any  change  in  membership  does  not  operate  as  a  dis- 
solution.28 

Transfer  of  Partner  s  Interest. 

The  transfer  of  one  partners  interest^ either  by ^voluntary ^ 
acfor"T^~saTe  under  legal  process,  operates  as  a  dissolution.29 
Tins  rule  is,  of  course,  subject  to  the  difference  of  opinion  as 
to  whether  a  partner  can  dissolve  a  partnership  for  a  definite 
term  by  any  voluntary  act  of  himself  alone.30  A  sale  by  one 
partner  to  his  copartner  is  clearly  a  dissolution  by  mutual 
consent.31 

Same — By  Decree  of  Court. 

145.     A  courtofeguity  has  iurisdiction  to  decree  the  disso- 
lution of  a  partnership,  and_will^do  so  where  sufficient, 
cause^ejxists^ 

Where  a  partnership  is  one  at  will,  it  is  not  necessary  to 
resort  to  equity  to  obtain  a  dissolution,  because,  as  has  been 

Call  v.  Moss,  112  111.  493;  Blake  v.  Sweeting,  121  111.  67,  12  N.  E.  67; 
Givins  v.  Berry,  21  Ky.  L.  R.  680,  52  S.  W.  942. 

28  Billingsley  v.  Dawson,  27  Iowa,  210;  Gill  v.  Ferris,  82  Mo.  156. 

29Blaker  v.  Sands,  29  Kan.  587;  Clark  v.  Carr,  45  111.  App.  469; 
Freeman  v.  Hemenway,  75  Mo.  App.  611;  Ren  ton  v.  Chaplain,  9  N.  J. 
Eq.  62;  Comstock  v.  Buchanan,  57  Barb.  (N.  Y.)  127;  Mumford  v. 
McKay,  8  Wend.  (N.  Y.)  442;  Marquand  v.  New  York  Mfg.  Co.,  17 
Johns.  (N.  Y.)  525;  Wilson  v.  Waugh,  101  Pa.  233;  Horton's  Appeal, 
13  Pa.  67;  Power  v.  Kirk,  1  Pittsb.  (Pa.)  510;  Carter  v.  Rowland,  53 
Tex.  540;  Sanchez  v.  Goldfrank  (Tex.  Civ.  App.),  27  S.  W.  204;  Bank 
v.  Carrollton  Railroad,  11  Wall.  (U.  S.)  624,  Mechem's  Cases,  147; 
Heath  v.  Sansom,  4  Barn.  &  Adol.  172;  Carroll  v.  Evans,  27  Tex. 
262.  A  sale  and  transfer  of  the  interest  which  one  partner  has  in  a 
particular  stock  held  by  the  firm  does  not  operate  as  a  dissolution. 
Comstock  v.  Buchanan,  57  Barb.  (N.  Y.)  127. 

so  See  Ferrero  v.  Buhlmeyer,  34  How.  Prac.  (N.  Y.)  33. 

si  Walker  v.  Davis,  59  Iowa,  103,  12  N.  W.  798;  Wiggin  v.  Good- 
win, 63  Me.  389;  Heath  v.  Sansom,  4  Barn.  &  Adol.  172.  Compare 
Taft  v.  Buffum,  14  Pick.  (Mass.)  322. 


270  DISSOLUTION. 

seen,  such  a  partnership  may  be  dissolved  al  any  time  by  any 
partner  by  simply  giving  notice  to  that  effect;  bu1  where  the 
partnership  is  for  a  stipulated  term,  and  a  partner  desires 
to  dissolve  it  before  the  expiration  of. such  term,  it  is  (lie  usual 
practice  to  resort  to  a  court  of  equity  for  a  decree  of  dissolu- 
tion. This  is  because,  conceding  (lie  power  of  one  partner  to 
dissolve  such  a  partnership  by  his  own  act,  he  dissolves  it  at 
his  peril,  and  must  respond  to  his  copartners  in  damages  if 
he  'lot's  so  without  just  and  legal  cause.  By  resort  to  a  court 
of  equity,  he  avoids  this  risk,  and  the  existence  of  cause  for 
dissolution  is  determined  in  advance  of  actual  dissolution. 
Of  course  such  relief  can  be  had  only  in  equity,  as  a  court  of 
law  has  no  jurisdiction  of  such  matters.  The  mere  fact  that 
a  partner  may  dissolve  by  giving  notice  to  his  copartner  does 
not  preclude  a  resort  to  a  court  of  equity  as  a  dissolution  in- 
volves a  settlement  and  accounting  over  which  equity  has 
plenary  jurisdiction.32  The  mere  filing  of  a  suit  seeking  dis- 
solution and  settlement  of  a  partnership  does  not,  ipso  facto, 
operate  as  a  dissolution.33 


Grounds  for  Dissolution. 

146.     A  court  of  equity  may  dissolve  a  partnership  for  any 
of  the  following  causes,  viz. : 

(a)  Fraud-in  formation  of  partnership. 

(b)  Insanity  of  partner. 

(c)  Hopelessness-of  success. 

(d)  Misconduct  of  parJjier.L  ;  "'  :f^^a  - 

Fraud. 

i  u,-v  h;!-  1  k ■en  led  into  a  partnership  by  moans 
of  fraud  and  deceit,  he  may  maintain  a  suit  in  equity  for  a 

32  Adams  v.   Shewalter,  139  Ind.  178,  38  N.  W.  607;    Babcock  v. 
llermance,  48  N.  Y.  683. 

33  Bagnetto  v.  Bagnetto,  51  La.  Ann.  1200,  25  So.  987. 


GROUNDS  FOR.  271 

dissolution/34  or  he  may  maintain  a  suit  to  rescind  the  con- 
tract, and  require  his  partner  to  place  him  in  statu  quo,35 
provided,  of  course,  he  has  not  ratified  the  contract  after 
knowledge  of  the  fraud.36 

Insanity. 

Insanity  of  a  partner  does  not,  ipso  facto,  and  byoperatmn 
of  law,  work  a  dissolution  of  the  partnership,37  Imt  it  constj- 

tutos  n  sufficient  ground  to  justify  a  court  of  equitv  in  decree- 
nig  a  dissolution/5*  though,  where  it  is  only  temporary,  a  dis- 
solution will  be  denied.30 

Hopelessness  of  Success. 

Any  circumstance  which  renders  the  continuance  of  the 
partnership.  £>r  the  attainment  of  the  common  end  with  a 
view  to  which  it  was  entered  into,   practically  impossible,  is 

.Mn     r..m.m     r       r    .,  ■  ■ '»'«■  I  llll    f    I, ..  _  ■ 

sufficient  to  warrant  a  dissolution.40      Where  certain  loss  j* 

■^  Oteri  v.  Scalzo,  145  U.  S.  578. 

ssLindl.  Partn.  pp.  480,  482;  Richards  v.  Todd,  127  Mass.  167; 
Howell  v.  Harvey,  5  Ark.  270,  Mechem's  Cases,  354;  Newbigging  v. 
Adam,  34  Ch.  Div.  582;  Mycock  v.  Beatson,  13  Ch.  Div.  384;  Pillans 
v.  Harkness,  Colles,  442;  Rawlins  v.  Wickham,  1  Giff.  355,  3  DeGex 
&  J.  304.  Misconduct  and  mismanagement  by  a  partner  is  not  ground 
for  a  rescission  where  the  partner  was  guilty  of  no  fraud  when  the 
partnership  agreement  was  made.  Hollister  v.  Simonson,  36  App. 
Div.  63,  55  N.  Y.  Supp.  372. 

30  St.  John  v.  Hendrickson,  81  Ind.  350. 

3?  Raymond  v.  Vaughn,  128  111.  256,  21  N.  E.  566,  holding  that 
even  an  adjudication  of  insanity,  the  appointment  of  a  conservator, 
and  commitment  to  an  asylum  does  not  operate  as  a  dissolution. 
But  see  Isler  v.  Baker,  6  Humph.  (Tenn.)   85. 

38  Raymond  v.  Vaughn,  128  111.  256,  21  N.  E.  566;  Jurgens  v.  Itt- 
man,  47  La.  Ann.  367,  16  So.  952,  Burdick's  Cases,  558;  Griswold  v. 
Waddington,  15  Johns.  (N.  Y. ),  57,  Burdick's  Cases,  544;  Jones. v. 
Noy,  2  Mylne  &  K.  125;  Jones  v.  Lloyd,  L.  R.  18  Eq.  265. 

39  Raymond  v.  Vaughn,  128  111.  256,  21  N.  E.  566;  Kirby  v.  Carr, 
3  Younge  &  C.  185;  Whitwell  v.  Arthur,  35  Beav.  140. 

40Lindl.  Partn.  p.  575;  Jackson  v.  Deese,  35  Ga.  84;  Moies  v. 
O'Neill,  23  N.  J.  Eq.  207;  Brown  v.  Hicks,  8  Fed.  155;  Rosenstein  v. 


272  DISSOLUTION. 

the  only  resull  of  going  on,  any  partner  La  entitled  to  have  the 
firm  dissolved,  even  though  the  agreed  term  of  its  existence 
lias  aol  yet  expired.41 

Misconduct  of  Partner. 

A  court  of  equity  will  dissolve  a  partnership  at  the_in- 
stance  of  a  partner  where  a  copartner  so  seriously  miscon- 

.  ,         ■■"■II     ■  A>jiiiim— ay  mimi    m 

ducts  himself  as  to  render  it  practically  impossihle  tor  his  ,-,,- 
partners  t<>  continue  to  act  with  him!42  "But  it  is  not  con- 
sidered  to  be  the  duty  of  the  court  to  enter  into  partnership 
squabbles,  and  it  will  not  dissolve  a  partnership  on  the  ground 
of  the  ill  temper  or  misconduct  of  one  or  more  of  the  partners, 
unless  the  others  are  in  effect  excluded  from  the  concern,  or 
unless  the  misconduct  is  of  such  a  nature  as  to  utterly  destroy 
the  mutual  confidence  which  must  subsist  between  partners  if 
they  are  to  continue  to  carry  out  their  business  together."  43 
Excluding  a  partner  from  any  voice  in  the  management  of 
the  business,  and  disregard  of  his  advice  and  wishes,44  irre- 
concilable differences  and  personal  ill-will  between  the  part- 
ners rendering  co-operation  in  the  business  impossible,45  keep- 
Burns,  41  Fed.  841,  Burdick's  Cases,  557;  Sebastian  v.  Booneville 
Academy  Co.,  22  Ky.  L.  R.  186,  56  S.  W.  810. 

4i  Jennings  v.  Baddeley,  3  Kay  &  J.  78;  Wilson  v.  Church,  13  Ch. 
Div.  1;  Rosenstein  v.  Burns,  41  Fed.  841;  Holladay  v.  Elliott,  8  Or. 
84. 

42  Moore  v.  Price,  116  Ala.  247,  22  So.  531;  Cash  v.  Earnshaw,  66 
111.  402;  Gerard  v.  Gateau,  84  111.  121;  Bishop  v.  Breckles,  Hoff.  Ch. 
(N.  Y.)  534;  Henn  v.  Walsh,  2  Edw.  Ch.  (N.  Y.)  129;  Berry  v.  Cross, 
3  Sandf.  Ch.  (N.  Y.)  1;  Reiter  v.  Morton,  96  Pa.  229;  Warner  v. 
Leisen,  31  Wis.  169;  Rosenstein  v.  Burns,  41  Fed.  841. 

43Lindl.  Partn.  p.  580.  See,  also,  Anon.,  2  Kay  &  J.  441;  Smith  v. 
Jeyes,  4  Beav.  503;  Goodman  v.  Whitcomb,  1  Jac.  &  W.  589;  Harrison 
v.  Tennant,  21  Beav.  482.    An  see  cases  cited  in  preceding  note. 

44  Einstein  v.  Schnebly,  89  Fed.  540. 

45Philipp  v.  Von  Raven,  26  Misc.  552,  57  N.  Y.  Supp.  701;  Sutro 
v.  Wagner,  23  N.  J.  Eq.  388;  Baxter  v.  West,  1  Drewry  &  S.  173; 
Pease  v.  Hewitt,  31  Beav.  22. 


RIGHTS,  POWERS,  ETC.,  AFTER.  273 

ing  erroneous  accounts,  and  not  entering  receipts,46  refusal 
to  meet  on  matters  of  business,47  conveyance  of  partnership 
realty  in  payment  of  individual  debts,4S  or  breach  of  the  part- 
nership articles,49  have  been  held  sufficient  to  justify  a  disso- 
lution, and  where  the  misconduct  of  a  partner  is  such  as  to 
disable  him  from  carrying  on  the  business  for  which  the  part- 
nership was  formed,  it  is  of  course  sufficient  ground  for  dis- 
solution.49a 

A  mere  error  in  judgment,  upon  the  part  of  a  partner,  caus- 
ing loss  to  the  firm,50  or  a  want  of  courtesy  on  the  part  of  a 
partner  to  customers  of  the  firm,51  is  not  sufficient  cause  for 
a  decress  of  dissolution. 

A  dissolution  will  not  be  granted  upon  the  ground  of  mis- 
conduct at  the  instance  of  the  partner  guilty  of  the  miscon- 
duct in  question.52 

Rights,  Powees,  and  Liabilities  After  Dissolution. 

147.     The  rights,  powers,  and  liabilities  of  partners  and  cred- 
itors after  dissolution  will  be  considered,  in  the  order 


named,  with  respect  to  thosg^ 

(a)  Of  partners  generally. _ 

(b)  Of  liquidating  partners. 

(c)  Of  surviving  partners. 

(d)  Of  estate  of  deceased  partner. 

(e)  Of  creditors^^ 

46  Cottle  v.  Leitch,  35  Cal.  434;  Cheesman  v.  Price,  35  Beav.  141. 

47  De  Berenger  v.  Hamel,  7  Jar.  &  B.  25. 

«  Hubbard  v.  Moore,  67  Vt.  532,  32  Atl.  465. 

49  Abbot  v.  Johnson,  32  N.  H.  9. 

49a  Partnership  was  formed  to  do  certain  work  for  a  third  party, 
and  one  partner  was  guilty  of  misconduct  for  which  he  was  dis- 
charged.   Lapenta  v.  Lettieri,  72  Conn.  377,  44  Atl.  730. 

50  Cash  v.  Earnshaw,  66  111.  402. 

si  Gerard  v.  Gateau,  84  111.  121,  Mechem's  Cases,  366. 
52  Gerard  v.  Gateau,  84  111.  121,  Mechem's  Cases,  366;  Harrison  v. 
Tennant,  21  Beav.  493. 

18 


L>74  DISSOLUTION. 


Same — Of  Partners   Gkxkkaij.y. 

148.  After  dissolution,  a  partner^sjyrtliority  to  bind  his  co- 
partner  is  limited  to  acts  necessary  or_proper  for  the 
winding  up  of  the  partnership  affairs. 

After  a  dissolution,  the  authority  of  each  partner  to  bind 
the  firm,  and  the  other  rights  and  obligations  of  the  partners, 
continue,  notwithstanding  the  dissolution,  so  far  as  may  be 
necessary  to  wind  up  the  affairs  of  the  partnership,  and  to 
complete  transactions  begun  but  not  finished  at  the  time  of 
the  dissolution,  but  not  otherwise.53  In  the  absence  of  a  dif- 
ferent agreement  between  them,  each  partner  has  an  equal' 
right  to  th  possession  of  firm  assets,  and  is  under  an  equal 
dutv  to  apply  them  to  the  payment  of  firm  debts.64  Thus, 
after  a  dissolution,  a  partner  can  sell  the  partnership  assets,55" 

esHeartt  v.  Walsh,  75  111.  200;  Major  v.  Hawkes,  12  111.  298;  West- 
ern Stage  Co.  v.  Walker,  2  Iowa,  504;  Seldner  v.  Mt.  Jackson  Nat. 
Bank,  66  Md.  488,  8  Atl.  262;  Gray  v.  Green,  142  N.  Y.  316,  37  N.  E. 
124;  Robbins  v.  Fuller,  24  N.  Y.  570;  Hilton  v.  Vanderbilt,  82  N.  Y. 
591;  Thursby  v.  Lldgerwood,  69  N.  Y.  198;  Lange  v.  Kennedy,  20 
Wis.  279;  Huntington  v.  Potter,  32  Barb.  (N.  Y.)  300;  Gates  v. 
Beecher,  60  N.  Y.  518,  Burdick's  Cases,  372;  Sutton  v.  Dillaye,  3  Barb. 
(N.  Y.)  529;  Hubbard  v.  Matthews,  54  N.  Y.  43;  Briggs  v.  Briggs, 
15  N.  Y.  471;  Whiting  v.  Farrand,  1  Conn.  60;  Palmer  v.  Sawyer, 
114  Mass.  1;  Smythe  v.  Harvie,  31  111.  62;  Butchart  v.  Dresser,  10 
Hare,  453,  4  De  Gex,  M.  &  G.  542;  Peacock  v.  Peacock,  16  Ves.  57,  19 
Eng.  Rul.  Cas.  552.  The  partnership,  with  all  its  incidents,  contin- 
ues for  the  purpose  of  settling  the  partnership  affairs,  and  until  that 
is  effected.  Murray  v.  Mumford,  6  Cow.  (N.  Y.)  441.  Payment  of 
rent  due  under  a  pre-existing  partnership  lease  is  not  the  creation  of 
a  new  obligation,  but  the  payment  of  debt  due  from  the  firm,  which 
the  partner  had  the  right  to  make.  Barnes  v.  Northern  Trust  Co., 
169  111.  112,  48  N.  E.  31. 

s*  Gray  v.  Green,  142  N.  Y.  316,  37  N.  E.  124;  Goertner  v.  Trustees 
of  Canajoharie,  2  Barb.  (N.  Y.)  625;  Lapenta  v.  Lettieri,  72  Conn. 
377,  44  Atl.  730. 

55  Hogendobler  v.  Lyon,  12  Kan.  276;  Needham  v.  Wright,  140  Ind. 


RIGHTS,  POWERS,  ETC.,  AFTER.  275 

or  pledge  or  mortgage  them  for  the  purpose  of  completing  a 
transaction  already  commenced,56  or  of  securing  a  debt  al- 
ready incurred.57  Each  partner  has  authority  to  collect 
debts  due  the  firm,  receive  payment,  and  grant  discharges.58 
He  also  has  power  to  pay  and  settle  firm  liabilities.59  ■  Xew 
obligations  which  are  necessary  and  merely  incidental  to  the 
performance  of  existing  obligations  of  the  firm  may  be  in- 
curred,00 but  where  their  advisability  is  doubtful  one  party 
cannot  proceed  against  the  dissent  of  his  copartner.603.  This 
authority  does  not  extend  to  a  bankrupt  partner,  for  a  firm 
is  in  no  case  bound  by  the  acts  of  a  bankrupt  partner,61 

190,  39  N.  E.  510,  Burdick's  Cases,  260;  Robbins  v.  Fuller,  24  N.  Y. 
570;  Fox  v.  Hanbury,  Cowp.  445. 

56  Butchart  v.  Dresser,  4  De  Gex,  M.  &  G.  542;  Miller  v.  Florer,  15 
Ohio  St.  148.  But  compare  Roots  v.  Mason  City  S.  &  M.  Co.,  27  W. 
Va.  483. 

5T  Thompson  v.  Noble,  108  Mich.  19,  65  N.  W.  563;  In  re  Clough,  31 
Ch.  Div.  325. 

ss  Gordon  v.  Albert,  168  Mass.  150,  46  N.  E.  423;  Van  Keuren  v. 
Parmelee,  2  N.  Y.  523,  Mechem's  Cases,  411;  Robbins  v.  Fuller,  24 
N.  Y.  570;  Huntington  v.  Potter,  32  Barb.  (N.  Y.)  300;  Ward  v.  Bar- 
ber, 1  E.  D.  Smith  (N.  Y.)  423;  Goertner  v.  Trustees  of  Canajoharie, 
2  Barb.  (N.  Y.)  625;  Fettretch  v.  Armstrong,  5  Rob.  (N.  Y.)  339; 
Sanford  v.  Mickles,  4  Johns.  (N.  Y.)  224;  Riddle  v.  Etting,  32  Pa. 
412.  Payment  to  a  retiring  partner,  with  notice  that  he  has  retired, 
is  good.  Fettretch  v.  Armstrong,  5  Rob.  (N.  Y.)  339.  See,  also,  to 
same  effect,  Gillilan  v.  Sun  Mut.  Ins.  Co.,  41  N.  Y.  376.  A  partner 
has  no  power  to  accept  anything  but  money  in  payment  of  a  firm 
debt.    Kutz  v.  Naugle,  7  Pa.  Super.  Ct.  179. 

eoMilliken  v.  Loring,  37  Me.  408;  Bass  v.  Taylor,  34  Miss.  342. 

soButchart  v.  Dresser,  10  Hare,  453,  4  De  Gex,  M.  &  G.  542,  Bur- 
click's  Cases,  363.  Although,  ordinarily,  a  partner  has  no  authority 
after  dissolution  to  make  or  renew  negotiable  paper,  where  the  firm 
had  agreed  to  renew  certain  notes,  and  subsequently  dissolved,  any 
partner  has  authority  to  renew  the  notes,  in  pursuance  of  the  firm 
agreement.    Richardson  v.  Moies,  31  Mo.  430,  Burdick's  Cases,  366. 

soa  Extensive  and  doubtful  litigation.  Richard  v.  Mouton,  109 
La.  465,  33  So.  563. 

«  Craven  v.  Edmondson,  6  Bing.  734,  31  Rev.  R.  529;  and  Dick- 
son v.  Cass,  1  Barn.  &  Adol.  343. 


276  DISSOLUTION. 

though  any  person  who  lnss,  after  the  bankruptcy,  repre-* 
eented  himself,  or  suffered  himself  to  be  represented,  as  a  part- 
ner of  the  bankrupt,  may  be  liable  for  his  acts.63 

A  partner  has  no  authority,  after  dissolution,  to  make  or 
indorse  negotiable  paper  on  behalf  of  the  firm,63  unless  he 
has  been  specially  authorized  t<»  do  so  by  his  copartners.  But 
where  negotiable  paper  forms  pari  of  the  firm  assets,  it  seems 
that  a  partner^  in  the  course  of  winding  up  the  partnershii 
affairs,  may  transfer  such  paper  by  an  indorsement,  "With- 
oui  recourse."  04  After  dissolution,  a  partner  cannot  bind  his 
copartners  by  an  admission  of  liability.05  So  it  is  generally 
held  that  one  partner  cannot  take  a  case  out  of  the  statute  of 
limitations  by  an  admission  of  liability,  new  promise,  or  par- 


es Lacy  v.  Woolcott,  2  Dowl.  &  R.  458. 

C3  Huntington-White  Lime  Co.  v.  Mock,  14  Ind.  App.  221;  Smith 
v.  Sheldon,  35  Mich.  42,  Mechem's  Cases,  431;  Goodspeed  v.  South 
Bend  Chilled  Plow  Co.,  45  Mich.  237,  7  N.  W.  810;  Potter  v.  Tolbert, 
113  .Mich.  486,  71  N.  W.  849,  Burdick's  Cases,  367;  Sanford  v.  Mickles, 
4  Johns.  (N.  Y.)  224;  Lansing  v.  Gaine,  2  Johns.  (N.  Y.)  300;  Na- 
tional Bank  v.  Norton,  1  Hill  (N.  Y.)  572;  Mitchell  v.  Ostrom,  2 
Hill  (N.  Y.)  520;  Lusk  v.  Smith,  8  Barb,  (N.  Y.)  570;  McCowin  v. 
Cubbison,  72  Pa.  358;  Tarver  v.  Evansville  Furniture  Co.,  20  Tex. 
Civ.  App.  66,  48  S.  W.  199;  Commercial  Bank  v.  Miller,  96  Va.  357, 
31  S.  E.  812.  To  the  effect  that  a  partner,  after  dissolution,  can  give 
notes  in  liquidation  of  a  partnership  liability,  as,  by  so  doing  he  does 
not  create  a  new  debt  or  obligation,  see  McPherson  v.  Rathbone,  11 
Wend.  (N.  Y.)  96,  and  Ward  v.  Tyler,  52  Pa.  393. 

04  Yale  v.  Eames,  1  Mete.  (Mass.)  486.  Contra,  Fellows  v.  Wyman, 
33  N.  H.  351;  Sanford  v.  Mickles,  4  Johns.  (N.  Y.)  224. 

bis  Ilackley  v.  Patrick,  3  Johns.  (N.  Y.)  356;  Smith  v.  Ludlow,  6 
Johns.  (N.  Y.)  267;  Hopkins  v.  Banks,  7  Cow.  (N.  Y.)  650;  Walden 
v.  Sherburne,  15  Johns.  (N.  Y.)  409;  Brisban  v.  Boyd,  4  Paige,  Ch. 
(N.  Y.)  17;  Hart  v.  Woodruff,  24  Hun  (N.  Y.)  510,  Burdick's  Cases, 
370;  Barnes  v.  Northern  Trust  Co.,  169  111.  112,  48  N.  E.  31.  Contra, 
Wood  v.  Braddick,  1  Taunt.  104.  After  dissolution,  one  partner  has 
no  power  to  bind  his  copartners  by  a  promise  to  pay  a  firm  indorse- 
ment from  which  they  have  been  discharged  by  want  of  notice  of 
dishonor.    Schoneman  v.  Fegley,  7  Pa.  433. 


RIGHTS,  POWERS,  ETC.,  AFTER.  977 

tial  payment.66  but  upon  this  point  there  is  a  difference  of 
opinion,  and  some  courts  have  taken  a  contrary  view.67 

Of  course,  if  there  has  been  no  notice  of  dissolution,  the 
implied  powers  of  a  partner  remain  the  same  after  as  before 
dissolution.68 

Same — Of    Liquidating   Paktneks. 

149.     By  mutual  agreement,  the  partners  may  delegate  ex- 
clusive authority  to  one  or  more  of  their  number  to 
*\L.       windjip_and  settle  the~partnership  affairs. 

A  liquidating  partner  is  one  of  a  dissolved  firm  who  re- 
ceives and  disburses  the  assets,  to  the  exclusion  of  the  others, 
with  their  consent,  and  by  his  own  apparent  voluntary  action. 
Formal  appointment  is  not  necessary,  nor  must  every  act  of 
his  be  without  consultation  with  the  others.69  The  duty  of 
a  liquidating  partner  is  to  collect  and  adjust  debts  due  to  the 
firm,  to  turn  the  assets  into  money,  to  pay  and  discharge  the 
outstanding  liabilities,  and  then  to  pay  over  to  the  other  part- 
ners their  just  share  of  the  remaining  surplus.70  He  has  the 
same  powers  and  authority  that  any  other  partner  has  after 

<«Tate  v.  Clements,  16  Fla.  339;  Van  Keuren  v.  Parmelee,  2  N.  Y. 
523,  Mechem's  Cases,  411;  Bush  v.  Stowell,  71  Pa.  208;  Reppert  v. 
Colvin,  48  Pa.  248;  Levy  v.  Cadet,  17  Serg.  &  R.  (Pa.)  126;  Jack  v. 
McLanahan,  191  Pa.  631,  43  Atl.  356;  Davis  v.  Poland,  92  Va.  225,  23 
S.  E.  292;  Bell  v.  Morrison,  1  Pet.  (U.  S.)  351.  Compare  Forbes  v. 
Garfield,  32  Hun  (N.  Y.)  389;  Clement  v.  Clement,  69  Wis.  599,  35 
N.  W.  17. 

6T  Beardsley  v.  Hall,  36  Conn.  270;  Merritt  v.  Day,  38  N.  J.  Law, 
32;  Whiteomb  v.  Whiting,  2  Doug.  652. 

cs  See  Bristol  v.  Sprague,  8  Wend.  (N.  Y.)  423.  And  see,  generally, 
ante,  §  107. 

coGarretson  v.  Brown,  185  Pa.  447,  40  Atl.  293;  Fulton  v.  Central 
Bank  of  Pittsburgh,  92  Pa.  112. 

to  Gilmore  v.  Ham,  142  N.  Y.  1,  36  N.  E.  826;  Woodson  v.  Wood,  84 
Va.  478,  5  S.  E.  277. 


0  7^  DISSOLUTION. 

dissolution,  and  no  greater,  unless  they  are  expressly  con- 
ferred. His  authority  is  Limited  to  the  performance  of  acta 
necessary  or  proper  to  the  grinding  up  of  the  partnership  busi- 
ness,73 and  cannot,  except  as  to  persons  having  no  notice  of 
the  dissolution,  Kind  the  firm  by  new  obligations.71*  The 
appointmenl  merely  takes  away  the  authority  <>f  the  other 
partners  to  act,  and  confers  it  exclusively  upon  the  liquidat- 
ing partner.72  Thus,  a  liquidating  partner  has  no  implied 
authority,  to,  make,  indorse,  or  renew  negotiable  paper  on  be- 
half  of  the  linn.7:!  So,  he  has  no  authority  to  hind  his  Late 
copartners  by  an  acknowledgmenl  or  admission  of  Liability.74 
In  Pennsylvania,  the  powers  of  a  liquidating  partner  are 
somewhat  more  extensive  than  those  of  partners  generally 
after  dissolution.75 

-i  Hilton  v.  Yanderbilt,  82  N.  Y.  591;  Gilmore  v.  Ham,  142  N.  Y.  1; 
Palmer  v.  Dodge,  4  Ohio  St.  21. 

TiaBass  Dry  Goods  Co.  v.  Granite  City  Mfg.  Co.,  116  Ga.  176,  42 
S.  E.  415. 

"2  Hayes  v.  Heyer,  4  Sandf.  Ch.  (N.  Y.)  485.  In  Napier  v.  McLeod, 
9  Wend.  (N.  Y.)  120,  two  partners,  on  the  dissolution,  constituted 
the  third  their  attorney  to  collect,  etc.,  all  debts  due  to  the  firm.  It 
was  held  that  the  power,  although  in  terms  irrevocable,  did  not  op- 
erate as  a  transfer,  and  that  a  release  of  a  debt,  subsequently  exe- 
cuted by  one  of  the  other  partners,  was  good. 

73  Bank  of  Montreal  v.  Paige,  98  111.  109;  Van  Valkenburg  v.  Brad- 
ley, 14  Iowa,  108;  Perrin  v.  Keene,  19  Me.  355;  Potter  v.  Tolbert,  113 
Mich.  486,  71  N.  W.  849,  Burdick's  Cases,  367;  Smith  v.  Sheldon,  35 
Mich.  42,  Mechem's  Cases,  431;  Mauney  v.  Coit,  80  N.  C.  300;  Pal- 
mer v.  Dodge,  4  Ohio  St.  21;  Haddock  v.  Crocheron,  32  Tex.  276; 
Parker  v.  Cousins,  2  Grat.  (Va.)  372.  See,  also,  Brown  v.  Bamber- 
ger, 110  Ala.  342,  20  So.  114.  As  to  the  right  to  give  a  mere  acknowl- 
edgment of  the  amount  due  in  the  form  of  a  due-bill  or  'I.  O.  U.,'  see 
Smith  v.  Sheldon,  35  Mich.  42,  Mechem's  Cases,  431. 

'*  Hackley  v.  Patrick,  3  Johns.  (N.  Y.)  536.  This  rule  is,  of  course, 
subject  to  the  difference  of  opinion  prevailing  upon  the  general  ques- 
tion whether  any  partner  has  such  authority  after  dissolution.  See 
preceding  section. 

"•r>  In  Pennsylvania,  a  liquidating  partner  has  power  to  borrow 
money,  on  the  credit  of  the  late  firm,  for  the  purpose  of  paying  its 


RIGHTS,  POWERS,  ETC.,  AFTER  279 

As  to  persons  having  notice  of  the  appointment  of  a  liquid- 
ating partner,  the  other  partners  have  no  power  to  bind  the 
firm,  but  as  to  the  persons  without  notice,  any  partner  has 
power  to  bind  the  firm  by  any  act  within  the  apparent  scope 
of  his  authority,  notwithstanding  the  appointment  of  a  liquid- 
ating partner.76  The  extent  of  the  apparent  or  implied  au- 
thority of  a  partner,  both  before  and  after  dissolution,  has 
already  been  considered. 

A  liquidating  partner  is  a  ytia.si  truster,  and  must  act  with 
perfect  good  faith  in  all  things,  and  is  liable  for  anv  negli- 
'■  fraud,  ! hi t  imt  for  mere  errors  of  judgment.77  lie 
is  bound  to  account,  and.  acts i  of  irauo!. Ty  his  copartners  do  not 
relieve  him  of  such  duty  though  they  may  entitle  him  to  al- 
lowances in  his  account.773. 

In  the  absence  of  special  agreement,  a  liquidating  partner 
is  not  entitled  to  compensation  for  winding  up  the  business, 
by  way  of  commission  or  otherwise.78 

debts.  Davis'  Estate,  5  Whart.  (Pa.)  530;  Whitehead  v.  Bank  of 
Pittsburgh,  2  Watts  &  S.  (Pa.)  172;  Robinson  v.  Taylor,  4  Pa.  242; 
Brown  v.  Clark,  14  Pa.  469;  McCowin  v.  Cubbison,  72  Pa.  358.  He 
may  bind  his  late  copartners  by  an  indorsement  made  for  the  pur- 
pose of  raising  money  to  pay  partnership  debts.  Lloyd  v.  Thomas, 
79  Pa.  68.  He  may  make  or  renew  partnership  notes.  Meyran  v. 
Abel,  189  Pa.  215,  42  Atl.  122.  He  may  renew  an  accommodation  in- 
dorsement. Dundas  v.  Gallagher,  4  Pa.  205.  The  acknowledgment 
of  a  liquidating  partner  stops  the  running  of  the  statute  of  limita- 
tions which  has  not  already  closed  on  the  claim.  McCoon  v.  Gal- 
braith,  29  Pa.  293.  See,  also,  Jack  v.  McLanahan,  191  Pa.  631,  43 
Atl.  356. 

-nGillilan  v.  Sun  Mut.  Ins.  Co.,  41  N.  Y.  376;  Clark  v.  Reed,  31 
Leg.  Int.  (Pa.)  413. 

77  See  Garretson  v.  Brown,  185  Pa.  447,  40  Atl.  293;  Renfrow  v. 
Pearce,  68  111.  125;  Gunn  v.  Black,  60  Fed.  151,  8  C.  C.  A.  534. 

77a  Wilson  v.  Keller,  195  Pa.  98,  45  Atl.  682. 

78  Dougherty  v.  Van  Nostrand.  Hoff.  Ch.  (N.  Y.)  68;  Stockdale  v. 
Maginn,  207  Pa.  227,  56  Atl.  439;  Lamb  v.  Wilson,  3  Neb.  (Unoff.) 
496,  92  N.  W.  167. 


0 


L'v,)  DISSOLUTION. 

Same — Of  Surviving  Partners. 

150.  Upon  the  death  of  a  partner,  the  surviving  partner  or 
partners  have  the  exclusive  right_oLj>pssession  and 
control  of  the  joint  property  for  the  purpose  of  wind- 


ing  up  the  partnership  business,  and  _may  do  any  act_ 
necessary  nr  p™per  for  that  purpose. 

In  General. 

It  has  already  been  seen  that  the  legal  title  to  firm  person- 
alty, and  the  equitable  title  to  firm  realty,  pass  upon  the  death 
of  a  partner  to  the  survivors,  but  in  trust  for  the  purpose  of 
winding  up  the  partnership  affairs.79  The  survivors  have 
the  exclusive  right  and  duty  to  act  in  the  settlement  of  the 
partnership,  and  the  personal  representatives  of  the  deceased 
partner  cannot  interfere.80     And  upon  the  death  of  the  last 

~Mlll X  I    I  I  11.11 III! I    - 

to  See  ante,  c.  7,  "Partnership  Property."  See,  also,  Miller  v. 
Jones,  39  111.  54;  Merritt  v.  Dickey,  38  Mich.  41;  Way  v.  Stebbins, 
47  Mich.  296,  11  N.  W.  166;  Barry  v.  Briggs,  22  Mich.  201;  Bassett  v. 
Miller,  39  Mich.  133;  Blodgett  v.  City  of  Muskegon,  60  Mich.  580,  27 
N.  TV.  686;  Pfeffer  v.  Steiner,  27  Mich.  537.  A  surviving  partner, 
being  entitled  to  the  possession  and  control  of  the  partnership  effects, 
can  proceed  directly  in  the  district  court  to  obtain  control  and  to 
have  a  partition  of  the  real  estate  belonging  to  the  partnership,  but 
standing  in  the  name  of  his  deceased  partner.  Gray  v.  Palmer,  9 
Cal.  616. 
so  Rice  v.  Merchants'  &  Planters'  Nat.  Bank,  100  Ala.  617,  13  So. 
659;  Merritt  v.  Dickey,  38  Mich.  41;  Loomis  v.  Armstrong,  49  Mich. 
521;  Roberts  v.  Kelsey,  38  Mich.  602;  Evans  v.  Evans,  9  Paige  (N. 
Y.)  178;  Jacquin  v.  Buisson,  11  How.  Prac.  (N.  Y.)  385;  Clay  v. 
Field,  34  Fed.  375;  McGorray  v.  O'Connor,  87  Fed.  586.  Chancery 
will  not  appoint  a  receiver,  and  thus  deprive  the  survivor  of  the 
right  to  close  up  the  affairs  of  the  firm,  if  he  is  responsible,  and  acts 
in  good  faith.  Evans  v.  Evans,  9  Paige,  Ch.  (N.  Y.)  178;  Connor  v. 
Alton.  Har.  (Mich.)  371.  Payment  of  one-half  of  a  debt  due  the  firm 
to  the  executor  of  a  deceased  partner  will  not  discharge  the  debtor 


POWERS,  RIGHTS,  ETC.,  AFTER  094 

■survivor,  the  right  passes  to  his  personal  representative.  It 
is  immaterial  whether  the  partnership  was  dissolved  by  death, 
or  whether  the  death  took  place  after  a  previous  voluntary 
dissolution.  The  rights  of  the  survivor  are  the  same  in 
either  case.81  In  a  few  states,  provision  is  made  by  statute 
for  the  administration  of  the  partnership  estate.  The  sur- 
viving partner  is  given  the  prior  right  to  take  out  letters  of 
administration,  but  if  he  fails  to  do  so,  the  administration  de- 
volves upon  the  personal  representative  of  the  deceased  part- 
ner.82 

The  powers  and  authority  of  surviving  partners,  as  in  the 
case  of  liquidating  partners,  or  partners  generally  after  dis- 
solution, extend  to,  and  are  limited  by,  such  acts  as  are  nec- 
essary or  proper  to  wind  up  the  affairs  of  the  late  firm.83 
They  may  do  whatever  is  needful  to  that  end*  even  to  the  bor- 
rowing of  money.S3a  They  may  and  must  carry  out  existing 
obligations,  and  have  power  to  do  anything  incidental  there- 
to,84 but  they  have  no  implied  power  to  enter  into  new  con- 

from  liability  to  the  survivor.  Wallace  v.  Fitzsimmons,  1  Dall. 
(Pa.)   248. 

si  Murray  v.  Mumford,  6  Cow.  (N.  Y.)  441,  in  which  case  the 
liquidating  partner  died,  and  it  was  held  that  the  other  partner  was 
entitled  to  the  possession  of  firm  assets,  as  against  the  personal  rep- 
resentatives of  the  deceased. 

82  See,  generally,  Mcintosh  v.  Zaring,  150  Ind.  301,  49  N.  E.  164; 
Carr  v.  Catlin,  13  Kan.  393;  Matherson  v.  Wilkinson,  79  Me.  159,  8 
Atl.  684;  McCaughan  v.  Brown,  76  Miss.  496,  25  So.  155;  Hargardine 
v.  Gibbons,  114  Mo.  561,  21  S.  W.  726,  affirming  45  Mo.  App.  460;  State 
v.  Withrow,  141  Mo.  69,  41  S.  W.  980;  Goodson  v.  Goodson,  140  Mo. 
206,  41  S.  W.  737. 

88  Powers  of  surviving  partners,  see,  generally,  Barton  v.  Lovejoy, 
66  Minn.  380,  57  N.  W.  935;  Bloodgood  v.  Bruen,  8  N.  Y.  362;  Corder 
v.  Steiner  (Tex.  Civ.  App.),  54  S.  W.  277. 

83a  Rosenthal  v.  Hasberg,  84  N.  Y.  Supp.  290. 

si  Little  v.  Caldwell,  101  Cal.  553,  36  Pac.  107;  Oliver  v.  Forrester, 
96  111.  315;  Mason  v.  Tiffany,  45  111.  392;  Miller  v.  Hoffman,  26  Mo. 
App.  199;  Denver  v.  Roane,  99  U.  S.  355. 


•_>sL'  DISSOLUTION. 

tracts,  or  to  continue  the  partnership  business.86  By  express 
agreement,  or  by  provision  in  the  will  of  the  deceased  partner, 
the  Burvivors  may  be  authorized  to  carry  on  the  business  and 
incur  new  obligations,  Dotwithstanding  the  death  of  a  part- 
ner.86 In  such  case,  the  surviving  partners  cannol  bind  the 
general  assets  of  the  estate  of  the  deceased  partner,  but  only 
those  already  invested  in  the  business.87 

Particular  /'overs. 

The  surviving  partner  may  apply  partnership  funds  to  the 
liquidation  of  any  obligation  of  the  firm,  and  to  the  discharge 
of  all  liens  upon  the  joint  property.88     He  may  sell  partner- 

85Remick  v.  Emig,  42  111.  342;  Forrester  v.  Oliver,  1  111.  App.  259; 
Young  v.  Scoville,  99  Iowa,  177,  68  N.  W.  670;  Robinson  v.  Simmons, 
146  Mass.  167,  15  N.  E.  558;  Oliver  v.  Olmstead,  112  Mich.  483,  70  N. 
W.  1036;  Dexter  v.  Dexter,  43  App.  Div.  268,  60  N.  Y.  Supp.  371;  Bass 
Dry  Goods  Co.  v.  Granite  City  Mfg.  Co.,  116  Ga.  176,  42  S.  E.  415. 
The  surviving  partner  may  continue  the  business  long  enough  to 
close  it  out  without  sacrificing  it,  but  no  longer.  Frey  v.  Eisen- 
hardt,  116  Mich.  160,  74  N.  W.  501.  Since  death  of  a  member  dis- 
solves a  partnership,  a  continuation  of  the  business  thereafter  by  the 
surviving  partner  and  the  executor  of  the  deceased  member,  in  pur- 
suance of  an  agreement  between  them,  is  the  formation  of  a  new 
partnership.     McGrath  v.  Cowen,  57  Ohio  St.  385,  49  N.  E.  338 

"Where  the  assets  of  a  partnership,  dissolved  by  the  death  of  one 
of  its  members,  were  used  by  a  new  firm  formed  by  the  surviving 
partner,  the  old  partnership  was  entitled  to  a  share  in  the  profits  of 
the  new  firm  proportionate  to  the  value  of  the  property  or  services 
contributed  by  the  new  firm,  but  all  the  property  of  the  new  firm 
should  not  be  regarded  as  assets  of  the  old."  Painter's  Ex'rs  v. 
Painter,  133  Cal.  XIX,  65  Pac.  135. 

B6  Evans  v.  Watts,  44  W.  N.  C.  (Pa.)  185;  Stewart  v.  Robinson,  115 
N.  Y.  328,  22  N.  E.  160,  163. 

si  Steiner  v.  Steiner  Land  &  Lumber  Co.,  120  Ala.  128,  26  So.  494; 
In  re  Roessler's  Estate,  19  Pa.  Co.  Ct.  Rep.  161,  5  Pa.  Dist.  Rep.  776; 
Jones  v.  Walker,  103  U.  S.  444,  Mechem's  Cases,  391. 

8s  Shearer  v.  Shearer,  98  Mass.  107,  Ames'  Cas.  185;  Lindner  v. 
Adams  County  Bank,  49  Neb.  735,  68  N.  W.  1028,  Burdick's  Cases, 
262,  Mechem's  Cases,  401;  Moist's  Adm'rs'  Appeal,  74  Pa.  166. 


POWERS,  RIGHTS,  ETC.,  AFTER.  283 

ship  assets,80  or  pledge  or  mortgage  them,90  for  purposes  con- 
nected with  the  settlement  of  the  estate,''1  or  may  make  an  as- 
signment for  the  benefit  of  creditors.02  He  has  the  sole  right 
to  collect  and  settle  claims,  receive  payment,  and  grant  dis- 
charges.93 A  surviving  partner  cannot  make  or  indorse  no 
gotiable  paper,  so  as  to  bind  other  cosurvivors  or  the  estate  of 

soMilner  v.  Cooper,  65  Iowa,  190,  21  N.  W.  558;  Cockerham  v.  Bos- 
ley,  52  La.  Ann.  65,  26  So.  814;  Durant  v.  Pierson,  124  N.  Y.  444,  26 
N.  E.  1095,  Mechem's  Cases,  403.  A  sole  surviving  partner  has  a 
right,  acting  honestly  and  with  reasonable  discretion  and  diligence, 
to  dispose  of  the  partnership  assets  as  he  pleases,  to  settle  all  debts 
against  the  firm,  to  make  any  compromise  he  may  deem  necessary, 
and  to  turn  the  assets  into  an  available  and  distributable  form. 
Barry  v.  Briggs,  22  Mich.  201.  See,  also,  to  same  effect,  Wilson  v. 
Soper,  13  B.  Mon.  (Ky.)  411;  Loeschigk  v.  Hatfield,  51  N.  Y.  660; 
Milner  v.  Cooper,  65  Iowa,  190,  21  N.  W.  558.  A  surviving  partner 
has  power  to  assign  a  chose  in  action,  e.  g.,  a  bond  and  mortgage,  be- 
longing to  the  late  firm,  and  payable  to  them.  Pinckney  v.  Wallace, 
1  Abb.  Prac.  (N.  Y.)  82. 

90  Breen  v.  Richardson,  6  Colo.  605;  Burchinell  v.  Koon,  25  Colo. 
59,  affirming  8  Colo.  App.  463;  In  re  Crane's  Estate,  4  Ohio  Dec.  398; 
Durant  v.  Pierson,  124  N.  Y.  444,  26  N.  E.  1095,  Mechem's  Cases,  403; 
Williams  v.  Whedon,  109  N.  Y.  333,  16  N.  E.  365;  Bohler  v.  Tappan, 
]  Fed.  469;  Butchart  v.  Dresser,  4  De  Gex,  M.  &  G.  542. 

9i  As  against  the  heirs  of  a  deceased  partner,  a  surviving  partner 
cannot  mortgage  the  decedent's  interest  in  partnership  lands  for  his 
own  individual  debts,  or  for  any  purpose  except  to  close  up  the  busi- 
ness, and  pay  partnership  debts.  Brown  v.  Watson,  66  Mich.  223,  33 
N.  W.  493. 

»2  Shattuck  v.  Chandler,  40  Kan.  516,  20  Pac.  225,  Mechem's  Cases, 
296;  Loeschigk  v.  Hatfield,  5  Rob.  (N.  Y.)  26,  4  Abb.  Prac.  (N.  S.; 
N.  Y.)  210,  affirmed  51  N.  Y.  660;  Egberts  v.  Wood,  3  Paige  (N.  Y.) 
517;  Hutchinson  v.  Smith,  7  Paige,  Ch.  (N.  Y.)  26;  Williams  v. 
Whedon,  109  N.  Y.  333,  16  N.  E.  365;  Patton  v.  Leftwich,  86  Va.  421; 
Emerson  v.  Senter,  118  U.  S.  3,  Burdick's  Cases,  253.  But  see  State 
v.  Withrow,  141  Mo.  69,  41  S.  W.  980. 

9- Cockerham  v.  Bosley,  52  La.  Ann.  65,  26  So.  814;  McCaiighan 
v.  Brew",  7$  ftliftg  ^Qfi,  25  So.  155.  A  settlement  between  an  employee 
of  a  partnership  and  the  surviving  partner,  fixing  the  past  salary  of 
the  employee,  which  had  never  before  been  agreed  upon,  is  binding 
upon  the  firm  and  the  heirs  or  representatives  of  the  deceased  part- 


L's-i  DISSOLUTION. 

the  deceased  partner,  in  the  absence  of  express  authority.94 
A  debl  cannot  be  revived  by  the  surviving  partner,  so  as  to 
charge  the  estate  or  interest  of  the  deceased  partner,  when 
haired  by  statute,  against  the  partnership.96 

.  I  ctions. 

At  common  law  after  the  death  of  a  partner,  all  actions 
upon  claims  in  favor  of  or  against  the  firm  must  be  brought 
by  or  againsl  the  surviving  partners  alone.  The  personal 
representative  of  the  deceased  partner  cannot  be  joined  either 
as  a  plaintiff96  or  as  a  defendant.97  Upon  the  denth_ojLtlio 
last  survivor,  his  persojiaXrepresentatives  alone  can  su^  or  hfl. 
■sued."8  These  rules  resulted  from  the  joint  nature  of  part- 
nership liabilities  and  demands.  At  common  law,  the  death 
of  a  partner  or  joint  debtor  absolutely  discharged  his  liability, 
and  cast  it  upon  the  survivor.  So,  upon  the  death  of  a  joint 
obligee,  the  entire  beneficial  interest  passed  to  the  survivors.90 
The  rule  was  otherwise  in  equity,  and  has  been  very  generally 

ner,  unless  set  aside  in  a  direct  proceeding,  on  the  ground  of  error, 
mistake,  or  fraud.    Hart  v.  Bowen,  86  Fed.  877. 

^Carleton  v.  Jenness,  42  Mich.  110,  3  N.  W.  284;  Matteson  v.  Nath- 
anson,  38  Mich.  377.    Compare  Johnson  v.  Berlizheimer,  84  111.  54. 

»5  Bloodgood  v.  Eruen,  8  N.  Y.  362. 

osBelton  v.  Fisher,  44  111.  32;  Brown  v.  Allen,  35  Iowa,  306;  Wil- 
son v.  Soper,  13  B.  Mon.  (Ky.)  411;  Holbrook  v.  Lackey,  13  Mete. 
(Mass.)  132;  Bassett  v.  Miller,  39  Mich.  133;  Holmes  v.  DeCamp,  1 
Johns.  (N.  Y.)  34;  Daby  v.  Ericsson,  45  N.  Y.  786;  Beach  v.  Hayward, 
10  Ohio,  455;  Davis  v.  Church,  1  Watts  &  S.  (Pa.)  241;  McCartney 
v.  Hubbell,  52  Wis.  360,  9  N.  W.  61. 

■<-  Palmer  v.  Maxwell,  11  Neb.  598,  10  N.  W.  524;  Arthur  v.  Gris- 
wold,  16  Abb.  Prac.  (N.  S.;  N.  Y.)  238;  Voorhis  v.  Baxter,  18  Barb. 
(N.  Y.)  592;  Hoskinson  v.  Eliot,  62  Pa.  393;  Rusling  v.  Brodhead, 
55  N.  J.  Eq.  200,  35  Ala.  841,  Burdick's  Cases,  273.  The  contrary  is 
held  under  the  code.  See  Ricart  v.  Townsend,  6  How.  Prac.  (N.  Y.) 
460;  Henderson  v.  Kissam,  8  Tex.  46. 

os  Galbraith  v.  Tracy,  153  111.  54,  38  N.  E.  937,  Burdick's  Cases, 
257;  Nehrboss  v.  Bliss,  88  N.  Y.  600,  Burdick's  Cases,  246;  Costley  v. 
Wilkerson's  Adm'r,  49  Ala.  210;  Richards  v.  Heather,  1  Barn.  &  Aid. 
•29. 

ooRoosvelt  v.  McDowell,  1  Ga.  489;  Walker  v.  Doane,  131  111.  27, 


POWERS,  RIGHTS,  ETC.,  AFTER.  285 

changed  by  statute.  Thus,  in  some  states  it  is  provided  that 
the  personal  representatives  of  a  deceased  partner  may  he 
joined  as  defendants  with  the  survivors.100  In  other  states, 
partnership  obligations  have  been  made  joint  and  several, 
and  aTlirni  creditor  may  either  sue  the  survivorgjilone,  or  pro- 
ceed against  the  estate  of  the  deceased  partner  separately.101 

Bight  to  Compensation. 

The  law  imposes  upon  the  surviving  partner,  as  an  inci- 
dent to  the  contract  of  partnership,  the  duty  of  collecting  the 
assets  and  winding  up  the  business  of  the  firm,  and  he_is-jiQ_L 
entitled_to  compensation  thpyp-fn-^  in  the  absence  of  an  ex- 
press agreement  to  Jhpt  pfFp.pt. 10 2 

Liability  to  Estate  of  Decedent. 

Whether  or  not  a  surviving  partner  is  to  be  regarded  as  a 
trustee  may  admit  of  some  question,103  but,  at  all  events,  in 

22  N.  E.  1006;  Eich  v.  Sievers,  73  111.  194;  Wapello  County  v.  Big- 
ham,  10  Iowa,  39;  Cochrane  v.  Cushing,  124  Mass.  219;  Fisher  v. 
Allen,  36  N.  J.  Law,  203;  Neal's  Ex'rs  v.  Gilmore,  79  Pa.  421;  Grant 
v.  Shurter,  1  Wend.  (N.  Y.)  148;  Hargadine  v.  Gibbons,  45  Mo.  App. 
460;  Pendleton  v.  Phelps,  4  Day  (Conn.)  481;  Trundle  v.  Edwards, 
4  Sneed  (Tenn.)  574.  That  there  is  no  beneficial  survivorship  in 
partnership  property,  see  ante,  c.  7,  "Partnership  Property." 

ioo  Anderson  v.  Pollard,  62  Ga.  46;  Trundle  v.  Edwards,  4  Sneed 
(Tenn.)  573;  Wiesenfeld  v.  Byrd,  17  S.  C.  113. 

ioi  Ralston  v.  Moore,  105  Ind.  246,  4  N.  E.  673;  Shackleford's 
Adm'r  v.  Clark,  78  Mo.  491;  Weil  v.  Guerin,  42  Ohio  St.  302. 

102  Young  v.  Scoville,  99  Iowa,  177,  68  N.  W.  670;  Com.  v.  Bracken's 
Heirs,  17  Ky.  L.  R.  785,  32  S.  W.  609;  Coakley's  Adm'r  v.  Hazelwood's- 
Ex'r,  21  Ky.  L.  R.  40,  49  S.  W.  1067;  Smith  v.  Smith,  51  La.  Ann.  72, 
24  So.  618;  Loomis  v.  Armstrong,  49  Mich.  521,  14  N.  W.  505,  63  Mich. 
355,  29  N.  W.  867;  Ames  v.  Downing,  1  Bradf.  (N.  Y.)  321,  Burdick's 
Cases,  606.  Compare  Romnson  v.  Simmons,  146  Mass.  167,  15  N.  E. 
558;  Zell's  Appeal,  126  Pa.  329,  17  Atl.  647;  Painter  v.  Painter  (Cal.), 
36  Pac.  865.  In  the  absence  of  an  express  provision  to  the  contrary, 
salary  provided  for  by  the  partnership  articles  does  not  continue 
after  dissolution  of  partnership  by  death  of  a  partner.  Rights  of 
surviving  partners  were  being  considered.  Comstock  v.  McDonald, 
126  Mich.  142,  85  N.  W.  579. 

103  See  ante,  §§  67-71. 


286  DISSOLUTION. 

all  his  transact  inns  he  is  liable  for  the  most  perfect  good  faith, 
and  niiisi  afford  the  representatives  of  the  deceased  full  in- 
formation as  to  the  affairs  of  the  firm,  and  must  account  to 
them  for  his  administration  of  the  estate.104  lie  cannot 
make  any  profil  by  use  of  the  partnership  effects  for  his  own 
benefit.106  A  surviving  partner  is  liable  to  the  estate  of  the 
deceased  partner  for  any  Losses  caused  by  his  negligence  or 
want  of  good  faith,  hut  net  otherwise.100 


Same — Of  Estate  of  Deceased  Partner. 

151.  The  estateof_a_deceased_partner  is  entitled  toreceij 

from  the  survivors  such   partner's  share  of  the   hi 
assets  after  all  its  affairs  have  been  settled. 

152.  The  estate  of  a  deceased  partner  is  liable  in  equity^anjj-- 


under  modern  statutes,  to  firm  creditors. 


It  has  been  seen  in  a  previous  chapter  that,  upon  the  death 
of  a  partner,  the  title  to  firm  assets  vests  in  the  survivors,  hut 
merely  for  the  purpose 'of  settling  up  the  partnership  af- 
fairs.     There  is  no  beneficial  right  of  survivorship,  and  the 

104  Robertson  v.  Burrell,  110  Cal.  568,  42  Pac.  1086;  Valentine  v. 
YVysor,  123  Ind.  47,  23  N.  E.  1076;  Mechem's  Cases,  382;  Cockerham 
v.  Bosley,  52  La.  Ann.  65,  26  So.  814;  Coakley's  Adm'r  v.  Hazelwood's 
Ex'r,  21  Ky.  L.  R.  40,  49  S.  W.  1067;  Heath  v.  Waters,  40  Mich.  457; 
Roberts  v.  Kelsey,  38  Mich.  602;  Ogden  v.  Astor,  4  Sandf.  (N.  Y.) 
311. 

too  Little  v.  Caldwell,  101  Cal.  553,  36  Pac.  107;  Galbraith  v.  Tracy, 
153  111.  54,  38  N.  E.  937,  Burdick's  Cases,  257;  Denholm  v.  McKay, 
148  Mass.  434,  19  N.  E.  551;  Bell  v.  McCoy,  136  Mo.  552,  38  S.  W. 
329;  Case  v.  Abeel,  1  Paige,  Ch.  (N.  Y.)  393;  Ogden  v.  Astor,  4 
Sandf.  (N.  Y.)  311. 

i"1' Oliver  v.  Forrester,  96  111.  315;  Gresham  v.  Harcourt,  93  Tex. 
149,  53  S.  W.  1019;  Cockerham  v.  Bosley,  52  La.  Ann.  65,  26  So.  814; 
Scudder  v.  Ames,  142  Mo.  187,  43  S.  W.  659. 


POWERS,  RIGHTS,  ETC.,  AFTER.  287 

•survivors  must  account  to  the  representatives  of  the  deceased 
partner  for  his  shares.1"7 

At  common  law,  partnership  obligations  were'  joint,  and 
consequently,  uppn  the  death  of  a  partner,  his  liability  was 
absolutely  discharged,  and  the  creditors  could  sue  the  sur- 
vivors only.108  In  equity,  firm  creditors  have  always  had  a 
.remedy  against  the  deceased  partner's  estate,  but  whether  thai 

remedy. is  concurrent  with  the  remedy  at  law  against  the  sur- 

"^ .  ii .   i    i  *•  * '  """ 

yivors,  or  whether  it  can  only  be  resorted  to  after  exhausting, 
without  avail,  the  remedy  against  the  survivors^  is  a question 
upon.jffhich  two  opposing  doctrines  prevail.^  It  has  fre- 
quently been  said  that,  in  equity,  partnership  debts  are  joint 
and  several.109  And  upon  this  theory  the  doctrine  lias  be- 
come established,  in  England  and  many  states  in  this  country, 
that  creditors  of  the  firm  have  concurrent  remedies  against 
the  estate  of  the  deceased  partner  and  the  surviving  partners, 
and  that  it  is  immaterial  which  remedy  is  pursued  first.110 
It  is  now  pretty  well  recognized  that  partnership  obligations 
are  joint  in  equity  as  well  as  at  law,111  but  the  doctrine,  hav- 
ing once  been  established  in  these  jurisdictions,  still  pre- 
vails. Tn  most  jurisdictions  in  this  country,  however,  it  i? 
~i  i  ,  - 


held  that  the  firm  creditors  must  exhaust  their  remedy  at  law 

against  the  survivors,  or  show  that  they  are  insolvent,  before 

in .  -'        — 

they  can  resort  to  the  estate  of  the  deceased  partner.112 

107  See  ante,  c.  7. 

Jos  See  ante,  p.  284. 

io»  Bates,  Partn.  §  748;  Wilkerson  v.  Henderson,  1  Mylne  &  K.  582. 

no  Savings  &  Loan  Soc.  v.  Gibb,  21  Cal.  596;  Mason  v.  Tiffany,  45 
111.  392:  Doggett  v.  Dill,  108  111.  560,  Burdick's  Cases,  495,  Mechem's 
Cases,  395;  Nelson  v.  Hill,  5  How.  (U.  S.)  127;  Summer  v.  Powell, 
2  Merivale,  30,  Turn.  &  R.  432,  16  Rev.  R.  136;  Clarke  v.  Bickers.  14 
Sim.  639;  In  re  Hodgson,  31  Ch.  Div.  177;  Hills  v.  M'Rae,  9  Hare, 
297;  Gray  v.  Chiswell,  9  Ves.  118b;  Wilkinson  v.  Henderson,  1  Mylne 
&  K.  582;  English  Partnership  Act  1890,  §  9. 

in  Kendall  v.  Hamilton,  4  App.  Cas.  504,  Burdick's  Cases,  488; 
Tn  re  Hodgson,  31  Ch.  Div.  177. 

n^Alsop  v.  Mather,  8  Conn.   584;    Currey  v.  Warrington,  5  Har. 


DISSOLUTION. 

The  direct  remedy  in  equity  against  the  estate  of  a  de- 
ceased  partner  really  rests  upon  a  sort  of  equitable  transfer 
to  the  creditor  of  the  surviving  partner's  right  to  compel  the 
estate  of  a  deceased  partner  to  contribute.118 

Statutes  exisl  in  many  states  making  partnership  obliga- 
i  ions  joint  and  several.  The  effect  of  such  statutes  is  to  give 
a  remedy  a1  Law  in  the  first  instance  against  the  estate  of  a 
deceased  partner.114 

The  right  of  joint  creditors  to  compete  with  separate  cred- 
itors in  the  distribution  of  the  estate  has  already  been  con- 
sidered.115 

Same — Of  Creditors. 

153.     Ajpere  dissolution  doesjotrelieye  partners_from  ex- 
isting  liabilities  to  creditors. 

It  is  obvious  that  the  partners  cannot  relieve  themselves 
from  their  liability  to  creditors  by  a  mere  dissolution,  or  by 
any  arrangement  between  themselves  as  to  the  performance  of 
their  obligations,110  though  the  creditor  may,  at  his  option, 

(Del.)  147;  Gowan  v.  Tunno,  Rich.  Eq.  Cas.  (S.  C.)  369;  Anderson 
v.  Pollard,  62  Ga.  46;  Pullen  v.  Whitfield,  55  Ga.  174;  Pearson  v. 
Keddy,  6  B.  Mon.  (Ky.)  128;  Voorhis  v.  Childs'  Ex'r,  17  N.  Y.  354, 
Burdick's  Cases,  490;  Pope  v.  Cole,  55  N.  Y.  124;  Island  Sav.  Bank 
v.  Galvin,  19  R.  I.  569,  36  Atl.  1125,  Burdick's  Cases,  500  (by  stat- 
ute) ;  Sherman  v.  Kreul,  42  Wis.  33. 

113  Voorhis  v.  Childs'  Ex'r,  17  N.  Y.  354,  Burdick's  Cases,  490. 

114  Camp  v.  Grant,  21  Conn.  41;  McLain  v.  Carson,  4  Ark.  164; 
Manning  v.  Williams,  2  Mich.  105;  In  re  Gray's  Estate,  111  N.  Y. 
404,  18  N.  E.  719. 

us  See  ante,  §§  129-132. 

neGriswold  v.  Waddington,  16  Johns.  (N.  Y.)  438;  Bronx  Metal 
Bed  Co.  v.  Wallerstein,  84  N.  Y.  Supp.  924;  Wood  v.  Braddick,  1 
Taunt.  104;  Crawshay  v.  Maule,  1  Swaust.  495;  Ex  parte  Williams, 
11  Ves.  3. 


POWERS,  RIGHTS,  ETC.,  AFTER.  2S9 

proceed  against  the  survivor  alone. 116a  If,  however,  the 
creditor  assents  to  an  arrangement  between  the  partners  by 
which  he  is  to  look  only  to  some  of  them  for  his  debt,  the  other 
partners  will  be  discharged.  The  rights  of  creditors  have 
been  sufficiently  considered  in  other  sections  of  this  book.117 

neaFennell  v.  Myers,  25  Ky.  L.  R.  589,  76  S.  W.  136.  And  see 
ante,  §  122. 

iiT  See  the  preceding  sections  of  this  chapter.  See,  also,  c.  9, 
"Rights  and  Liabilities  as  to  Third  Persons." 

19 


CHAPTER  XII. 

JOINT-STOCK  COMPANIES. 
154-155.     Definition  and  Nature. 

Definition  and  ^Nature. 

154.  Toint-stock  companies  are  partnersl 
stock  divided  into  jtransf  erable  shares. 

155.  In  the  absence  of  statute,  the  ordmary  principles  of  _ 

partnership  apply  to  joint-stock  cornpanie^. 

The  division  of  the  capital  stock  into  a  definite  number  of 
shares,  of  which  each  member  owns  one  or  more,  and  which 
may  be  transferred  to  others,  or  in  other  words,  the  absence  of 
any  delectus  personarum,  is  the  one  essential  feature  of  a 
"joint-stock  company.1  A  transfer  of  shares  does  not  involve 
a  dissolution  of  the  company.2  In  all  other  respects,  ioint- 
stock  companies  are  substantially  ordinary  partnerships.3 
Joint-stock  companies  are  legal  at  common  law.4  In  the  ab- 
sence of  statute,  they  are  governed  by  the  articles  of  associa- 

1  Phillips  v.  Blatchford,  137  Mass.  510;  Hedge's  Appeal,  G3  Pa. 
273. 

2  Jones  v.  Clark,  42  Cal.  180;  Tyrrell  v.  Washburn,  6  Allen  (Mass.) 
466;  Carter  v.  McClure,  98  Tenn.  109,  38  S.  W.  585,  Burdick's 
Cases,  37. 

s  Hoadley  v.  County  Com'rs  of  Essex,  105  Mass.  519;  Attorney- 
General  v.  Mercantile  Marine  Ins.  Co.,  121  Mass.  524;  Butterfield  v. 
Eeardsley,  28  Mich.  412;  Wells  v.  Gates,  18  Barb.  (N.  Y.)  554;  Eliot 
v.  Himrod,  108  Pa.  569;  Wehrman  v.  McFarlan,  6  Ohio,  N.  P.  333. 

*  Phillips  v.  Blatchford,  137  Mass.  510;  Gleason  v.  McKay,  134 
Mass.  419;  Harrison  v.  Heathorn,  6  Man.  &  G.  81. 


DEFINITION  AND  NATURE.  291 

tions  and  the  by-laws,5  and  the  general  principles  of  partner- 
ship already  discussed.6  Thus,  the  members  are  liable  in 
solido  for  all  the  debts  of  the  company.7  Suits  by  or  against 
the  company  must  be  brought  by  or  against  the  individual 
members  in  their  individual  names.8  No  action  at  law  lies 
between  the  members  based  upon  a  company  claim  or  liabil- 
ity.9 Dissolution  may  be  affected  by  mutual  consent  or  by  a 
decree  of  a  court  of  equity  in  the  same  manner  that  ordinary 
partnerships  are  dissolved.10     The  affairs  of  the  company  are 

5  Cochran  v.  Perry,  8  Watts  &  S.  (Pa.)  262;  Kingman  v.  Spurr,  7 
Pick.  (Mass.)  235;  Stimson  v.  Lewis,  36  Vt.  91. 

s  Pettis  v.  Atkins,  60  111.  454;  Robbins  v.  Butler,  24  111.  387; 
Williams  v.  Bank  of  Michigan,  7  Wend.  (N.  Y.)  539;  Skinner  v. 
Dayton,  19  Johns.  (N.  Y.)  513;  Crater  v.  Bininger,  45  N.  Y.  545; 
Hedges'  Appeal,  63  Pa.  274;  Lafond  v.  Deems,  52  How.  Prac. 
(N.  Y.)   41. 

i  Manning  v.  Gasharie,  27  Ind.  399;  Sullivan  v.  Campbell,  2  Hall 
(N.  Y.)  271;  Skinner  v.  Dayton,  19  Johns.  (N.  Y.)  513;  Lewis  v. 
Tilton,  64  Iowa,  220,  19  N.  W.  911;  Frost  v.  Walker,  60  Me.  468; 
Hedge's  Appeal,  63  Pa.  273;  Butterfield  v.  Beardsley,  28  Mich.  412; 
Wells  v.  Gates,  18  Barb.  (N.  Y.)  554;  Tyrrell  v.  Washburn,  6  Allen 
(Mass.)  466;  Walburn  v.  Ingilby,  1  Mylne  &  K.  61;  Hess  v.  Werts,  4 
Serg.  &  R.  (Pa.)  356;  Hunnewell  v.  Willow  Springs  Canning  Co.,  53 
Mo.  App.  245.  New  members  are  not  liable  for  debts  incurred  be- 
fore they  became  members.  Lake  v.  Munford,  4  Smedes  &  M.  (Miss.) 
312.  A  retiring  member  is  not  liable,  as  between  himself  and  the 
other  members,  for  either  existing  or  future  debts.  Stimson  v.  Lewis, 
36  Vt.  91. 

s  Pipe  v.  Bateman,  1  Iowa,  369;  Kingsland  v.  Braisted,  2  Lans. 
(N.  Y.)  17;  McGreary  v.  Chandler,  58  Me.  537;  Williams  v.  Bank  of 
Michigan,  7  Wend.  (N.  Y.)  542;  Niven  v.  Spickerman,  12  Johns. 
(N.  Y.)  401.  See,  also,  Secor  v.  Lord,  3  Keyes  (N.  Y.)  525;  Habicht 
v.  Pemberton,  4  Sandf.  (N.  Y.)  657.  Where  such  companies  are  or- 
ganized under  statutes,  it  is  usually  provided  that  the  company  shall 
sue  and  be  sued  in  its  own  name,  or  in  the  name  of  some  of  its  offi- 
cers. See  11  Am.  &  Eng.  Enc.  Law,  p.  1052,  tit.  "Joint  Stock  Com- 
panies." 

'J  Bailey  v.  Bancker,  3  Hill  (N.  Y.)  188;  Bullard  v.  Kinney,  10  Cal. 
€0.   But  see  Cross  v.  Jackson,  5  Hill  (N.  Y.)  478. 

io  Mann  v.  Butler,  2  Barb.  Ch.  (N.  Y.)  362;  Von  Schmidt  v.  Hunt- 


292  JOINT-STOCK  COMPANIES. 

managed  by  officers  and  directors  elected  by  the  members. 
Their  power  to  bind  the  company,  when  acting  within  the 
scope  of  their  authority,  is  the  same  as  that  of  a  partner  to 
bind  his  firm  in  ordinary  partnership.11 

Statutory  Provisions. 

In  some  jurisdictions,  joint-stuck  companies  are  regulated 
by  statute.  Companies  organized  under  such  statutes  arc 
very  nearly  in  the  nature  of  corporations.12  Of  course  the 
statute  will  prevail  wherever  in  conflict  with  the  general  prin- 
ciples of  partnership. 

ington,  1  Cal.  55;  Burke  v.  Roper,  79  Ala.  138;  Allen  v.  Clark,  65 
Barb.  (N.  Y.)  563. 

ii  Van  Aernam  v.  Bleistein,  102  N.  Y.  355,  7  N.  E.  537;;  Bodwell 
v.  Eastman,  106  Mass.  525;  French  Spiral  Spring  Co.  v.  New  Eng- 
land Car  Trust,  32  Fed.  44. 

i^Waterbury  v.  Merchants'  Union  Exp.  Co.,  50  Barb.  (N.  Y.)  157; 
Oak  Ridge  Coal  Co.  v.  Rogers,  108  Pa.  147;  School  District  v.  In- 
surance Co.,  103  U.  S.  707;  Sanford  v.  Board  of  Sup'rs  of  New  York, 
15  How.  Prac.  (N.  Y.)  172;  Thomas  v.  Dakin,  22  Wend.  (N.  Y.)  9; 
Maltz  v.  American  Exp.  Co.,  1  Flip.  611,  Fed.  Cas.  No.  9,002;  United 
States  Exp.  Co.  v.  Bedbury,  34  111.  459. 


CHAPTER  XIII. 

LIMITED  PARTNERSHIP. 
156-157.     Definition  and  Nature. 

Definition  and  Nature. 

156.  A  limited  partnership  is  a  partnership^  wherein  the, 
UabUity~oTone  or  more  of  the  members  is,  by  com- 
pliance  with  certain  statutory  provisions,  limited  to^ 
the  amountof  their  contribution  to  the  capital  stocky 


/ 


157.  Except  as  provided  by  statute,  the  ordinary  principles_ 
applicable  to  general  partnerships  are_lully  applicable, 
to  limited  partnerships.. 

In  General. 

It  has  been  seen,  in  an  ordinary  common-law  partnership, 
that  all  the  partners  are  liable  in  solido  to  the  full  extent  of 
their  private  fortunes  for  all  the  firm  obligations.  In  order 
to  encourage  the  employment  of  capital  in  trade,1  statutes 
have  been  enacted  in  most  of  the  states,  upon  compliance  with 
which  partnerships  may  be  formed  in  which  the  liability  of 
one  or  more  of  the  members  is  limited  to  the  amount  of  their 
contributions  to  the  capital  of  the  firm.  Partnerships 
formed  under  these  statutes  are  usually  called  "limited  part- 
nerships,"   as   distinguished    from   the   ordinary   or   general 

i  Singer  v.  Kelly,  44  Pa.  149,  Burdick's  Cases,  674;  Van  Riper  v. 
Poppenhausen,  43  N.  Y.  73;  Clapp  v.  Lacey,  35  Conn.  463,  Burdick's 
Cases,  611;  Manhattan  Co.  v.  Laimbeer,  108  N.  Y.  582,  15  N.  E.  712; 
Pars.  Partn.  §  421. 


294:  LIMITED  PARTNERSHIP. 

partnership,  wherein  the  liability  of  all  the  members  is  un- 
limited. The  term  "special  partnership"  is  used  in  some 
states  to  designate  this  kind  of  partnership,  but  the  term 
"limited  partnership"  seems  preferable,  as  "particular  part- 
nerships,v  or  partnerships  for  a  single  transaction,  are  some- 
times called  "special  partnerships." 

The  members  of  a  limited  partnership  whose  liability  la 
limited  are  called  "special  partners."  The  other  members  of 
the  firm  are  called  "general  partners."2 

Statutory  Provisions. 

The  statutory  requirements,  by  compliance  with  which  the 
liability  of  an  ordinary  partner  may  be  avoided,  are  designed 
for  the  protection  of  persons  dealing  with  the  firm.  This  end 
is  sought  by  requiring  publicity  as  to  certain  facts,  so  that 
persons  dealing  with  the  firm  may  not  be  misled  into  extend- 
ing credit  to  persons  whom  they  mistakenly  believe  to  be  lia- 
ble as  general  partners,3  and  by  requirements  designed  to 
make  sure  that  the  contribution  of  the  special  partner  has  been 
actually  paid  in  and  not  withdrawn. 

The  statutes  of  the  various  states  differ  more  or  less  in  de- 
tail, but  they  are  substantially  similar  in  character.  The 
statutes  all  provide  in  what  businesses  a  limited  partnership 
engage.  These  are  usually  mercantile,  mechanical,  or  manu- 
facturing business.  Insurance  and  banking  are  usually  pro- 
hibited. 

The  number  of  general  and  special  partners  is  usually 
regulated  by  statute.4 

2  For  a  general  discussion  of  the  nature  and  origin  of  limited 
partnerships,  see  Ames  v.  Downing,  1  Bradf.  Sur.  (N.  Y.)  321,  Bur- 
dick's  Cases,  606;  Jacquin  v.  Buisson,  11  How.  Prac.  (N.  Y.)  385; 
King  v.  Sarria,  69  N.  Y.  24;  Clapp  v.  Lacey,  35  Conn.  463,  Burdick's 
Cases,  611. 

3  Buck  v.  Alley,  145  N.  Y.  488,  40  N.  E.  236,  Burdick's  Cases,  624. 

4  Bernard  &  Leas  Mfg.  Co.  v.  Packard.  64  Fed.  309. 


DEFINITION  AND  NATURE.  295 

The  statutes  usually  require  the  partners  to  execute  a  cer- 
tificate stating  certain  facts  enumerated  in  the  statute, — 
usually  the  firm  name,  the  nature  of  the  business  to  be  con- 
ducted, the  names  and  residences  of  the  general  and  special 
partners,  the  amount  of  each  partner's  contribution,  and  the 
times  when  the  partnership  shall  commence  and  terminate.5 
This  certificate  must  be  acknowledged,  recorded,  and  pub- 
lished as  required  by  statute.6 

An  affidavit  is  also  usually  required  to  the  effect  that  the 
contributions  stated  in  the  certificate  to  have  been  paid  in 
have  been  actually  so  paid  in  the  manner  stated.  A  false 
statement  in  the  certificate  or  affidavit  renders  all  the  partners 
liable  as  general  partners.7 

The  contribution  of  the  special  partner  is  usually  required 
to  be  made  in  cash,  but  some  statutes  permit  the  special  part- 
ner to  contribute  property.  In  either  case,  it  is  of  vital  im- 
portance that  the  contribution  be  in  .exact  compliance  with  the 
statute,  and  be  actually  paid  in  or  turned  over  to  the  general 
partners  before  the  partnership  begins  business,  for  other- 

sLachaise  v.  Marks,  4  E.  D.  Smith  (N.  Y.)  610;  Metropolitan  Nat. 
Bank  v.  Sirret,  97  N.  Y.  320,  Burdick's  Cases,  633;  Manhattan  Co. 
v.  Phillips,  109  N.  Y.  383,  17  N.  E.  129;  Gearing  v.  Carroll,  151  Pa. 
79,  24  Atl.  1045;  Spencer  Optical  Mfg.  Co.  v.  Johnson,  53  S.  C.  533, 
31  S.  E.  392. 

o  Henkel  v.  Heyman,  91  111.  96;  Manhattan  Co.  v.  Laimbeer,  108 
N.  Y.  578;  Manhattan  Co.  v.  Phillips,  109  N.  Y.  383,  17  N.  E.  129; 
Metropolitan  Nat.  Bank  v.  Sirret,  97  N.  Y.  320,  Burdick's  Cases,  633; 
Bowen  v.  Argall,  24  Wend.  (N.  Y.)  496;  Smith  v.  Argall,  6  Hill 
(N.  Y.)  479,  3  Den.  (N.  Y.)  435;  Madison  County  Bank  v.  Gould,  5 
Hill  (N.  Y.)  309;  Tracy  v.  Tuffly,  134  U.  S.  206,  Burdick's  Cases.  647. 

7  Crouch  v.  First  Nat.  Bank,  156  111.  342,  40  N.  E.  974,  Burdick's 
Cases,  667;  Wilson  v.  Bean,  33  111.  App.  529;  Durant  v.  Abendroth, 
69  N.  Y.  148;  Van  Ingen  v.  Whitman,  62  N.  Y.  513;  Ropes  v.  Colgate, 
17  Abb.  N.  C.  (N.  Y.)  143;  Tilge  v.  Brooks,  124  Pa.  178,  16  Atl.  746; 
Robbins  Elec.  Co.  v.  Weber,  172  Pa.  635,  34  Atl.  116;  Sheble  v.  Strong, 
128  Pa.  315,  18  Atl.  397;  Ussery  v.  Crusman  (Tenn.  Ch.),  47  S.  W. 
C67;  Chick  v.  Robinson,  95  Fed.  619. 


or>H  LIMITED  PARTNERSHIP. 

Aviso  no  limited  partnership  will  be  formed,  and  all  the  mem- 
bers will  be  Liable  as  general  partners.8 

It  is  usually  provided  that  the  business  of  the  firm  shall  be 
conducted  under  a  firm  name,  in  which  the  names  of  the  spe- 
cial partners  shall  not  appear,  and  without  the  addition  of 
the  word  "company,"  or  any  other  general  or  equivalent 
term.9 

In  some  states  the  statute  requires  the  firm  to  post  in  a  con- 
spicuous place  sonic  sign  on  which  is  painted,  in  full,  the 
names  of  all  the  members  of  the  partnership,  stating  who  are 
genera]  and  who  are  special  partners.10 

Withdrawal,  Alteration,  and  Interference. 

The  statutes  all  forbid  the  withdrawal  in  any  manner  by 
I'm-  special  partner  of  any  part  of  his  contribution.  In  some 
states  it  is  provided  that,  if  he  does  withdraw,  he  must  restore 
it  with  interest,  In  other  states  such  withdrawal  renders  the 
special  partner  liable  as  a  general  partner.11 

sHolliday  v.  Union  &  Paper  Bag  Co.,  3  Colo.  342;  Lineweaver  v. 
Slagle,  64  Md.  465,  2  Atl.  693;  Pierce  v.  Bryant,  5  Allen  (Mass.)  91; 
Haggerty  v.  Foster,  103  Mass.  17;  Myers  v.  Edison  Gen.  Elec.  Co., 
59  N.  J.  Law,  153,  35  Atl.  1069;  Hotopp  v.  Huber,  160  N.  Y.  524,  55 
N.  E.  206,  affirming  16  App.  Div.  327,  44  N.  Y.  Supp.  617;  Van  Ingen 
v.  "Whitman,  62  N.  Y.  513;  Metropolitan  Nat.  Bank  v.  Sirret,  97  N.  Y. 
320;  Manhattan  Co.  v.  Phillips,  109  N.  Y.  383,  17  N.  E.  129;  Ropes 
v.  Colgate,  17  Abb.  N.  C.  (N.  Y.)  143;  Durant  v.  Abendroth,  69  N.  Y. 
148;  Richardson  v.  Hogg,  38  Pa.  153;  Rehfuss  v.  Moore,  134  Pa.  462, 
19  Atl.  756;  Reynolds  v.  Creveling,  177  Pa.  267,  35  Atl.  686.  Con- 
tribution of  check  is  sufficient  though  it  is  not  paid  until  after  the 
filing  of  the  certificate.    Chick  v.  Robinson,  95  Fed.  619. 

n  Groves  v.  Wilson,  168  Mass.  370,  47  N.  E.  100;  Burdick's  Cases, 
630;  Buck  v.  Alley,  145  N.  Y.  488,  40  N.  E.  236,  Burdick's  Cases.  624; 
Buck  v.  Alley,  82  Hun,  29,  31  N.  Y.  Supp.  324;  Andrews  v.  Schott, 
10  Pa.  47;  Hubbard  v.  Morgan,  Fed.  Cas.  No.  6,817. 

io  Gearing  v.  Carroll,  151  Pa.  79,  24  Atl.  1045. 

ii  Beers  v.  Reynolds,  11  N.  Y.  97;  Baily  v.  Hornthal,  154  N.  Y. 
648,  49  N.  E.  56;    Lachaise  v.  Marks,  4  E.  D.   Smith   (N.  Y.)    610; 


DEFINITION  AND  NATURE.  297 

In  most  states  it  is  provided  that  every  alteration  which 
shall  be  made  in  the  names  of  the  original  partners,  the  nat- 
ure of  the  business,  or  in  the  capital  or  shares  thereof,  or  in 
any  other  matter  specified  in  the  original  certificate,  shall  be 
deemed  a  dissolution  of  the  limited  partnership,  and,  if  the 
partnership  is  carried  on  after  such  alteration,  it  shall  be 
deemed  a  general  partnership  unless  renewed  as  a  limited 
partnership,  as  provided  by  statute.12 

The  statutes  also  provide  that  the  general  partners  only 
shall  be  authorized  to  transact  business  and  sign  for  the  part- 
nership, and  provide  that  if  the  special  partner  transacts  busi- 
ness for  the  firm,  or  interferes  in  any  way,  he  shall  be  deemed 
a  general  partner.13 

Necessity  of  Compliance  with  Statute. 

A  limited  partnership  is  a  true  partnership,  and  is_^ass. 
erned  by  all  the  principles  applicable  to  ordinary  partnerships. 
except  so  far  fas  the  statute  has  provided  otherwise.14  Accord- 
ingly, all  the  meml)ers  are  liable  as  general  partners  unless 
the  statutory  provisions  have  been  at  least  substantially,  and 
according  to  many  cases,  strictly  complied  with.10      "A  lim- 

George  v.  Carpenter,  73  Hun,  221,  25  N.  Y.  Supp.  1086;  Coffin's  Ap- 
peal, 106  Pa.  280;  Masters  v.  Lauder,  131  Pa.  195,  18  Atl.  872. 

12  Sarmiento  v.  The  Catherine  C,  110  Mich.  120,  67  N.  W.  1085, 
Burdick's  Cases,  678;  Perth  Amboy  Mfg.  Co.  v.  Condit,  21  N.  J.  Law, 
659,  Burdick's  Cases,  673;  Hayes  v.  Heyer,  35  N.  Y.  326;  Buckley  v. 
Lord,  24  How.  Prac.  (N.  Y.)  455;  Seibert  v.  Bakewell,  87  Pa.  506; 
Singer  v.  Kelly,  44  Pa.  145,  Burdick's  Cases,  674. 

"Columbia  Land  &  Cattle  Co.  v.  Daly,  46  Kan.  504,  20  Pac.  1042; 
Farnsworth  v.  Boardman,  131  Mass.  115;  .Taffe  v.  Krura,  88  Mo.  669; 
Continental  Nat.  Bank  v.  Strauss,  137  N.  Y.  148,  32  N.  E.  1066,  Bur- 
dick's Cases,  619;  Sharp  v.  Hutchinson,  100  N.  Y.  533,  3  N.  E.  500; 
First  Nat.  Bank  v.  Whitney,  4  Lans.  (N.  Y.)  34;  McKnight  v.  Rat- 
cliff,  44  Pa.  156. 

n  Ames  v.  Downing,  1  Bradf.  Sur.  (N.  Y.)  321,  Burdick's  Cases, 
606;  Wilkins  v.  Davis,  2  Low.  511,  Fed.  Cas.  No.  17,664. 

"Manhattan  Brass  Co.  v.  Allin,  35  111.  App.  336;   Richardson  v. 


298  LIMITED  PARTNERSHIP. 

ited  partnership  that  has  not  complied  with  the  law  of  its  cre- 
ation is  not  a  limited  partnership  at  all.  It  is,  however,  a 
partnership  in  which  all  the  members  are  liable  as  at  common 
law."  1G  Where  an  attempt  is  made  to  form  a  limited  part- 
nership to  engage  in  an  unauthorized  or  prohibited  business,, 
the  partnership  is  an  ordinary  one,  and  all  the  partners  are 
liable  as  general  partners.17 

Dissolution  and  Renewal. 

Upon  the  expiration  of  the  times  s.pecjflH  in  d™  oavtifi \ 
the  limited  partnershijj^gmes^o jtn  end,  and  notice  of  dissolu- 

Carlton,  109  Iowa,  515,  80  N.  W.  532;  Lineweaver  v.  Slagle,  64  Md.. 
465;  Pierce  v.  Bryant,  5  Allen  (Mass.)  91,  Burdick's  Cases,  631; 
In  re  Allen,  41  Minn.  430,  43  N.  W.  382;  Selden  v.  Hall,  21  Mo.  App. 
452;  White  v.  Eiseman,  134  N.  Y.  101,  31  N.  E.  276,  Burdick's  Cases, 
640;  Manhattan  Co.  v.  Laimbeer,  108  N.  Y.  578,  15  N.  B.  712;  Jacquin 
v.  Buisson,  11  How.  Prac.  (N.  Y.)  393;  Haddock  v.  Grinnell  Mfg. 
Corp.,  109  Pa.  372,  1  Atl.  174;  Briar  Hill  C.  &  I.  Co.  v.  Atlas  Works, 
146  Pa.  290,  23  Atl.  326;  Andrews  v.  Schott,  10  Pa.  47;  Richardson 
v.  Hogg,  38  Pa.  155;  Vandike  v.  Rosskam,  67  Pa.  330;  Maloney  v. 
Bruce,  94  Pa.  249;  Eliot  v.  Himrod,  108  Pa.  579;  Hite  Natural  Gas 
Co.'s  Appeal,  118  Pa.  436,  12  Atl.  267;  Hill  v.  Stetler,  127  Pa.  145, 
13  Atl.  306,  17  Atl.  887;  Vanhorn  v.  Corcoran,  127  Pa.  255,  18  Atl. 
16;  Sheble  v.  Strong,  128  Pa.  315,  18  Atl.  397;  In  re  Gibbs'  Estate, 
157  Pa.  59,  28  Atl.  1023;  In  re  Merrill,  12  Blatchf.  224,  Fed.  Cas. 
No.  9,467;  Spencer  Optical  Mfg.  Co.  v.  Johnson,  53  S.  C.  533,  31  S.  E. 
392.  But  compare  Tracy  v.  Tuffly,  134  U.  S.  206,  Burdick's  Cases, 
647;  Staver  &  Abbott  Mfg.  Co.  v.  Blake,  111  Mich.  282,  69  N.  W.  508; 
Alleghany  Nat.  Bank  v.  Bailey,  147  Pa.  Ill,  23  Atl.  439.  Statutes 
providing  for  the  formation  of  limited  partnerships  should  receive 
a  reasonable  construction,  and  not  such  as  to  make  its  formation 
almost  impossible.  Manhattan  Co.  v.  Laimbeer,  108  N.  Y.  582,  15 
N.  E.  712.  Where  the  parties  agreed  to  create  a  limited  partner- 
ship, and  conducted  their  business  as  such,  each  is  estopped  as 
against  the  other  to  say  that  there  never  was  a  complete  formation 
of  such  partnership,  because  the  statutory  requirements  were  not 
literally  complied  with.  Casola  v.  Kugelman,  33  App.  Div.  428,  54 
N.  Y.  Supp.  89;  Ussery  v.  Crusman  (Tenn.  Ch.),  47  S.  W.  567. 

ia  Blumenthal  v.  Whitaker,  170  Pa.  309,  33  Atl.  103. 

«  McGehee  v.  Powell,  8  Ala.  827. 


DEFINITION  AND  NATURE. 


299 


tiATTigjinf,  npoggapry.18  The  partnership  may  be  renewed  by 
certificate  acknowledged,  recorded,  and  published  in  the  man- 
ner required  for  the  original  formation.     If  the  businesa-ia. 

continued  without  renewal,  the  partnership  is  a  general,  and 
notalimited,  partnership.19 

isHaggerty  v.  Taylor,  10  Paige  (N.  Y.)  261;  Marshall  v.  Lambeth, 
7  Rob.   (La.)  471;  Tilge  v.  Brooks,  124  Pa.  178,  16  Atl.  746. 

is  Columbia  Bank  v.  Berolzheimer,  33  App.  Div.  235,  53  N.  Y.  Supp. 
417;  Fifth  Ave.  Bank  v.  Colgate,  120  N.  Y.  381,  24  N.  E.  799;  Fourth 
St.  Nat.  Bank  v.  Whitaker,  170  Pa.  297,  33  Atl.  100,  Burdick's  Cases, 
655;  Hogan  v.  Hadzsits,  113  Mich.  568,  71  N.  W.  1092,  Burdick's- 
Cases,  660;  Arnold  v.  Danziger,  30  Fed.  898. 


TABLE  OF  CASES. 


References  are  to  pages. 


A. 


Aas   v.    Benham,    154,    156,   157, 

158. 
Abat  v.  Penny,  99. 
Abbot  v.  Johnson,  265,  273. 
Abbott  v.   Omaha   S.   &  R.   Co., 

63. 
Abel  v.  Sutton,  212. 
Abernathy  v.  Latimore,  241. 
Account  of  Wells  In  re,  265. 
Ach  v.  Barnes,  216. 
Ackley  v.  Staehlin,  247. 
Adam  v.  Newbigging,  22. 
Adams  v.  Adams,  112. 

v.  Albert,  231. 

v.  Ashman,  181. 

v.  Bankart,  191. 

v.Carter,  14,  32,  41,  44. 

v.  Church,  104. 

v.  Funk,  94. 

v.  Hackett,  228. 

v.  Morrison,  30. 

v.  Shewalter,  270. 

v.  Sturges,  203,  228,  236. 
Adamson  v.  Jarvis,  161. 
Addison  v.  Gandassequi,  250. 
Agace,  Ex  parte,  182. 
Ah  Lep  v.  Gong  Choy,  78,  195. 
Aigen  v.  Boston  &  M.  Railroad, 

46. 
Airey  v.  Borham,  164. 
Alabama  Fertilizer   Co.   v.   Rey- 
nolds, 45,  181,  185,  186. 


Alabama  Marble  &  Stone  Co.  v. 
Chattanooga   Marble   &   Stone 
Co.,  131. 
Alderson  v.  Popes,  67,  73. 
Aldrich  v.  Wallace,  137. 
Alexander  v.  Gorman,  237. 
Allcott  v.  Strong,  218. 
Alleghany  Nat.  Bank  v.  Bailey, 

298. 
Allen,  In  re,  298. 

Allen  v.  Center  Valley  Co.,  223,- 
226,  230. 
v.  Clark,  292. 
v.  Davis,  41,  44. 
v.  Dunn,  71. 
v.  Erie  City  Bank,  253. 
v.  Farrington,  187. 
v.  Hawley,  176. 
v.  Woonsocket  Co.,  91. 
Allison  v.  Perry,  86,  125. 
Alsop  v.  Mather,  287. 
Alvord  v.  Smith,  8. 
Ambler  v.  Bradley,  41. 
American  Cent.  R.  Co.  v.  Miles, 

242. 
American    Salt    Co.    v.    Heiden- 

heimer,  62. 
Ames  v.  Downing,  261,  285,  294,. 

297. 
Amsinck  v.  Bean,  230,  238,  239. 
Anderson  v.  Chenney,  138. 
v.  Lemon,  155. 
v.  Norton,  106,  224. 
v.  Pollard,  285,  288. 


302 


TABLE  OF  CASES. 


References  are  to  pages. 


Anderson  v.  Powell,  95. 
Anderton  v.  Shoup,  250. 
Andress  v.  Miller,  230. 
Andrews,  Ex  parte,  239. 
Andrews  v.  Keith,  138. 

v.  Planters'  Bank,  192. 

v.  Schott,  296,  298. 
A.  N.  Kellogg  Newspaper  Co.  v. 

Farrell,  21,  32. 
Anonymous,  272. 
Appleton  v.  Binks,  198,  249. 
Apsey,  Ex  parte,  199,  204. 
Arbuckle  v.  Taylor,  202. 
Armstrong  v.  Robinson,  103. 
Arnold  v.  Arnold,  252,  254. 

v.  Brown,  262. 

v.  Danziger,  299. 

v.  Hagerman,  225. 

v.  Hart,  214. 

v.  Morris,  248. 

v.  Nicols,  211. 

v.  Wainwright,  176. 
Arnstaedt  v.  Blumenfeld,  108. 
Arthur  v.  Griswold,  284. 
Artman  v.  Ferguson,  90. 
Arundell  v.  Bell,  111. 
Ash  v.  Guie,  54. 
Ashbrook  v.  Ashbrook,  168. 
Ashworth  v.  Stanwix,  200. 
Askew  v.  Silman,  212,  216. 

v.  Springer,  151,  163. 
Atkins  v.  Hunt,  50,  54. 

v.  Saxton,  138,  139. 
Atlantic  Glass  Co.  v.  Paulk,  241. 
Attaway  v.  Third  Nat.  Bank,  96. 
Attorney-General    v.    Mercantile 
Marine  Ins.  Co.,  290. 

v.  Stranyforth,  200,  202. 
Attwater  v.  Fowler,  252. 
Atwood  v.  Gillett,  262. 
Aubert  v.  Maze,  162. 
Aurora  State  Bank  v.  Oliver,  90. 
Austin  v.  Holland,  214,  216. 

v.  Thomson,  45. 


Austin  v.  Williams,  103,  105. 
Avery  v.  Craig,  265. 
Avritt  v.  Russell,  137. 

B. 

Babcock  v.  Hermance,  270. 

v.  Stewart,  10. 
Backus  v.  Fobes,  220. 
Badeley    v.    Consolidated    Bank, 

21,  40. 
Badger  v.  Daenieke,  243. 
Bagley  v.  Smith,  255,  267. 
Bagnetto  v.  Bagnetto,  270. 
Bailey  v.  Bancker,  391. 

v.  Clark,  41,  183. 
Baily  v.  Hornthal,  296. 
Baird  v.  Planque,  73. 
Baker  v.  Cummings,  153. 

v.  Stackpole,  218. 
Baker's  Appeal,  226,  232. 
Baldwin  v.  Burrows,  52. 
Bambrick  v.  Simms,  252,  254. 
Bancroft  v.  Hambly,  49,  60,  84. 

v.  Haworth,  106. 
Bank  v.  Carrollton  R.  Co.,  128, 
131,  269. 
v.  Gibson,  112. 
Bank   of  Arthur  v.   Ellars,   245, 

246,  247. 
Bank  of  Australasia  v.  Breillat, 

190. 
Bank  of  British  North  America 

v.  Delafield,  252,  254. 
Bank    of   Buffalo   v.    Thompson, 

100. 
Bank  of  Montreal  v.  Page,  264, 

278. 
Bank  of  New   Orleans   v.   Matt- 
hews, 214. 
Bank  of  Rochester  v.  Monteath, 

107,  108,  197. 
Bank  of  Scott  City  v.  Sandusky, 

210. 


TABLE  OF  CASES. 


303 


References  are  to  pages. 


Bank  of  Toronto  v.  Nixon,  97. 
Banks  v.  Evans,  138. 

v.  Gibson,  112. 
Banner  v.  Schlessinger,  201. 
Banner  Tobacco  Co.  v.  Jenison, 

183. 
Bannister  v.  Miller,  225. 
Barber  v.  Crowell,  124. 

v.  Smith,  240. 
Barcroft  v.  Haworth,  189. 
Bardwell  v.  Perry,  230,  236. 
Barfield  v.  Loughborough,  166. 
Barfoot  v.  Goodall,  216. 
Bariness  Wenlock  v.  River  Dee 

Co.,  199. 
Baring  v.  Crafts,  105. 
Barlett  v.  Smith,  212. 
Barnard  v.  Lapeer  &  P.  H.  Plank 

Road  Co.,  184. 
Barnes    v.    Northern    Trust    Co., 
274,  276. 

v.  Barrow,  243. 
Barrett  v.  McKenzie,  138. 
Barrow,  Ex  parte,  12. 
Barry  v.  Briggs,  129,  280,  283. 

v.  Jones,  163. 
Bartle  v.  Nutt,  95. 
Bartlett  v.  McRae,  218. 

v.  Meyer-Schmidt  Grocer  Co., 
225. 

v.  Powell,  67. 
Barton  v.  Lovejoy,  281. 
Bass  v.  Taylor,  275. 
Bass  Dry  Goods  Co.  v.  Granite 

City  Mfg.  Co.,  278,  282. 
Bassett  v.  Miller,  129,  280,  284. 

v.  Shepardson,  262. 
Bast's  Appeal,  157. 
Bates  v.  Babcock,  86,  94. 

v.  Lane,  160,  255. 

v.  Wills  Point  Bank,  219. 
Battley  v.  Lewis,  51,  53. 
Bawden  v.  Howell,  244. 
Baxter  v.  Rollins,  183. 


Baxter  v.  West,  272. 
Beacannon  v.   Liebe,   253. 
Beach  v.  Hayward,  284. 
Beakes  v.  Da  Cunha,  243. 
Beale  v.  Caddick,  218. 
Beall  v.  Lowndes,  91. 
Beard  v.  Webb,  89. 
Beardsley  v.  Hall,  277. 
Beatty  v.  Wray,  163. 
Beaumont  v.  Greathead,  217. 

v.  Meredith,  54. 
Beckham  v.  Drake,  16,  188,  199. 
Beckwith  v.  Talbot,  45. 
Bedford  v.  Deakin,  220. 
Beebe  v.  Rogers,  197. 
Beecher  v.  Bush,  21,  22,  24,  25, 

28,  32,  33,  41,  44,  65,  71. 
Beers  v.  Reynolds,  296. 
Behrens  v.  McKenzie,  88. 
Belcher  v.  Conner,  92. 

v.  Whittemore,  158. 
Bell  v.  McCoy,  286. 

v.  Morrison,  277. 

v.  Newman,  236. 
Belshaw  v.  Colie,  242. 
Belton  v.  Fisher,  284. 
Bender  v.  Hemstreet,  188. 
Benjamin  v.  Covert,  G7,  68,  215. 

v.  Porteus,  41. 
Bennett  v.  Pulliam,  6. 
Benson  v.  Hadfield,  221. 
Bentley  v.  Craven,  156. 
Benton  v.  Roberts,  189. 
Bergman  v.  Jones,  225. 
Bering  v.  Grafts,  12. 
Berkeley  v.  Hardy,  19S. 
Berkshire  Woolen  Co.  v.  Julllard, 

198. 
Bernard  &  Leas  Mfg.  Co.  v.  Pack- 
ard, 294. 
Bernheimer    v.    Rindskopf,    224, 

225. 
Berry  v.  Cross,  176,  272. 

v.  DeBruyn,  254,  255. 


30J: 


TABLE  OF  CASES. 


References  are  to  pn^.'s. 


Berry  v.  Folkes,  184,  261,  265. 
Berthold  v.  Goldsmith,  27. 
Bestor  v.  Barker,  22,  153. 
Bethel     v.     Judge     of     Superior 

Court,  248. 
Betts  v.  Gibbins,  161. 
Beudel  v.  Hettrick,  73. 
Bevan  v.  Lewis,  199. 

Bickford    v.    First   Nat.   Bank, 
250. 
Bidwell  v.  Madison,  52. 
Bienenstok  v.  Ammidown,  204. 
Bigelow  v.  Elliott,  22,  30,  46,  77. 

v.  Gregory,  63. 

v.  Reynolds,  244. 
Biggs  v.  Lawrence,  245. 
Bignold  v.  Waterhouse,  204. 
Billings  v.  Meigs,  247. 
Billingsley  v.  Dawson,  269. 
Binns  v.  Waddill,  247. 
Bird  v.  Fake,  242. 

v.  Hamilton,  149. 
Bisel  v.  Hobhs,  104. 
Bishop  v.  Austin,  248. 

v.  Breckles,  272. 

v.  Countess  of  Jersey,  204. 

v.  Georgeson,  4,  67. 

v.  Hall,  243. 
Bissell  v.  Foss,  10. 

v.  Michigan  Southern  R.  Co., 
91. 
Bixler  v.  Kresge,  88. 
Black  v.  Seipt,  126. 
Black's  Appeal,  226,  230,  234. 
Blackburn  Bldg.  Sov.  v.  Cunliffe, 

199. 
Blackford,  In  re,  207,  235. 
Blackwell  v.  Rankin,  256. 
Blades  v.  Free,  214. 
Blair  v.  Black,  236. 

v.  Bromley,  204. 
Blake  v.  Dorgan,  267. 

v.  Sweeting,  265,  269. 
Blaker  v.  Sands,  269. 


Blanchard  v.  Jefferson,  254. 

Blew  v.  Wyatt,  220. 

Blisset  v.   Daniel,  149,   150,  172, 

174,  175. 
Block  v.  Fitchburg  R.  Co.,  45. 
Blodgett  v.  American  Nat.  Bank, 
261. 
v.  City  of  Muskegon,  279. 
v.  Sleeper,  245,  246. 
Bloodgood  v.  Bruen,  281,  2S4. 
Bloom  v.  Lofgren,  153. 
Bloomfield  v.  Buchanan,  38,  84. 
Bloxham  v.  Pell,  14. 
Blue  v.  Leathers,  41,  44. 
Blumenfeld  v.  Seward  Bros.,  138. 
Blumenthal  v.  Whitaker,  298. 
Blyth  v.  Fladgate,  201,  205,  207. 
Boardman  v.  Close,  151. 
Bodwell  v.  Eastman,  292. 
Boggess  v.  Lilly,  162. 
Bohler  v.  Tappan,  283. 
Bohrer  v.  Drake,  47,  264. 
Bolton  v.  Puller,  226. 
Bonbonus,  Ex  parte,  191. 
Bond  v.  Gibson,  188. 
v.  Hays,  253. 
v.  Pittard,  39,  41. 
Bonfield  v.  Smith,  206. 
Bonwitt  v.  Heyman,  224. 
Booe  v.  Caldwell,  73. 
Booth  v.  Briscoe,  244. 

v.  Farmers'     &     Mechanics' 

Nat.  Bank,  155,  217. 
v.  Wonderly,  62. 
Bopp  v.  Fox,  85,  86,  125,  131,  132, 

145. 
Boston  &  Colorado  Smelting  Co. 

v.  Smith,  15,  22,  30,  31,  32,  48, 

50. 
Bostwick  v.  Champion,  45. 
Botsford  v.  Kleinhans,  218. 
Bouker  Contracting  Co.  v.  Scrib- 

ner,  215,  216. 
Bourne  v.  Freeth,  69. 


TABLE  OF  CASES. 


305 


References 

Bovill  v.  Wood,  222. 
Bowen  v.  Argall,  295. 
v.  Richardson,  95. 
Bower  v.  Swadlin,  219. 
Bowker  v.  Bradford,  90. 
Boyd  v.  McCann,  68. 
Bracken  v.  Kennedy,  251. 
Bradbury  v.  Dickens,  110. 
Bradford  v.  Kimberly,  163. 
Bradley  v.  Brigham,  166. 
v.Ely,  21,  23,  26,  27. 
v.  Harkness,  11. 
Brady  v.  Chicago  &  G.  W.  R.  Co., 

59. 
Braruah  v.  Roberts,  189. 
Brandon  v.  Conner,  13,  15. 
Brann  v.  Wollacott,  242. 
Brayton  v.  Sherman,  226. 
Breard  v.  Blanks,  56. 
Breckinridge  v.  Shrieve,  189. 
Breen  v.  Richardson,  283. 
Brennan  v.  Pardridge,  103. 
Breslin  v.  Brown,  92. 
Brettel  v.  Williams,  184,  192. 
Brewer  v.  Browne,  136,  145. 
Brewster  v.  Mott,  247. 
Briar   Hill   C.   &  I.   Co.  v.  Atlas 

Works,  298. 
Brick,  In  re,  222. 
Bridges   v.   Wm.   C.   Sprague   & 

Pembroke  Iron  Co.,  32. 
Briggs  v.  Briggs,  274. 
v.  Partridge,  249. 
v.  Vanderbilt,  45. 
Bright  v.  Hutton,  60. 
Brink   v.   New  Amsterdam   Fire 

Ins.  Co.,  50. 
Brisban  v.  Boyd,  213,  276. 
Bristol  v.  Sprague,  277. 
Broad  foot  v.  Fraser,  137. 
Broadway   Nat.   Bank   v.   Wood, 

231. 
Bromley  v.  Elliot,  15,  19,  21,  183, 

196. 


are  to  pages. 

Bronx  Metal  Bed  Co.  v.  Waller- 
stein,  288. 
Brooke  v.  Enderby,  218. 

v.  Washington,  119,  120,  180, 
181,  183,  188,  196,  208. 
Brooks  v.  Martin,  96. 
Brooks-Waterfield  Co.  v.  Carpen- 
ter, 183,  185,  199. 

v.  Jackson,  185. 
Brophy  v.  Holmes,  93. 
Broughton  v.  Manchester  &  Sal- 
ford  Waterworks  Co.,  189. 
Brown  v.  Allen,  284. 

v.  Bamberger,  278. 

v.  Birdsall,  248. 

v.  Chancellor,  262. 

v.  Clark,  279. 

v.  Fitch,  206. 

V.Foster,  215,  216. 

v.  Hicks,  271. 

v.  Jaquette,  32,  41,  44. 

v.  Jewett,  89. 

v.  Lawrence,  104. 

v.  Leonard,  41,  67,  73. 

v.  Oakshot,  123. 

v.  Pickard,  105. 

v.  Stewart,  234,  236. 

v.  Watson,  283. 
Brown's  Adm'r  v.  Johnson,  249. 
Brown's  Appeal,  166,  237. 
Brown's  Ex'rs  v.  Brabham,  218. 
Brownell  v.  Steere,  163,  171. 
Brundage  v.  Mellon,  201. 
Brunson  v.  Morgan,  125. 
Brydges  v.  Branfill,  201. 
Buchan  v.  Sumner,  132,  143. 
Buchanan  v.  Curry,  191,  263. 
Buchoz  v.  Grandjean,  191. 
Buck  v.  Alley,  204,  296. 

v.  Mosley,  247. 

v.  Smith,  258,  259,  265. 
Buckan  v.  Sumner,  233. 
Buckhause,  In  re,  233. 
Buckingham  v.  Hanna,  7,  9. 


306 


TABLE  OF  CASES. 


References 

Buckingham  v.  Ludlum,  165. 
Buckley  v.  Barber,  129. 

v.  Buckley,  132,  143. 

v.  Lord,  297. 

v.  Wood,  186. 
Buckman  v.  Barnum,  47. 
Buckmaster  v.  Gowen,  255. 
Buckner  v.  Lee,  13,  14,  16. 
Buettner  v.  Steinbrecher,  191. 
Bulfinch   v.    Winchenbach,   58. 
Bulger  v.  Rosa,  225. 
Bull  v.  Coe,  255. 
Bullard  v.  Kinney,  291. 
Bullen  v.  Sharp.  36.  37,  66. 
Bullock  v.  Hubbard,  91,  230. 
Bult  v.  Morrell,  189. 
Bumpus  v.  Turgeon,  242. 
Burchell  v.  Wilde,  112. 
Buchinell  v.  Koon,  283. 
Burckle  v.  Eckhart,  30. 
Burdon  v.  Barkus,  122. 
Burfield  v.  Rouch,  135. 
Burgan  v.  Cahoon,  72. 

v.  Lyell,  10,  182,  214. 
Burgess  v.  Badger,  163,  164,  266. 
Burke  v.  Roper,  292. 
Burls  v.  Smith,  54. 
Burland  v.  Nash,  218. 
Burley  v.  Harris,  251. 
Burnett  v.   Snyder,  6,   7,  12,   13, 

18,  25,  30. 
Burney  v.  Boone,  255. 

v.  Savannah  Grocery  Co.,  90, 
262. 
Burns  v.  Nottingham,  252. 

v.  Pillsbury,  218. 
Burr  v.  De  La  Vergne,  159. 
Burt  v.  Lathrop,  54. 
Burton  v.  Goodspeed,  29. 
Burwell  v.  Springfield,  247. 
Burwitz  v.  Jeffers,  243. 
Bush  v.  Clark,  129,  229. 

v.  Linthicum,  88. 

v.  Stowell,  277. 


are  to  pages. 

Bushnell     v.     Consolidated     Ice 

Mach.  Co.,  4. 
Butchart  v.  Dresser,  191,  274,  275, 

283. 
Butler  v.  American  Toy  Co.,  91, 
261. 
v.  Butler,  90. 
v.  Finck,  49. 
Butler  Sav.  Bank  v.  Osborne,  56, 

57. 
Butterfield     v.     Beardsley,     290, 

291. 
Button  v.  Hoffman,  59. 
Buzard  v.  First  Nat.  Bank,  30. 
Bybee  v.  Hawkett,  10,  12. 
Byington  v.  Gaff,  104. 
Byrd  v.  Fox,  252. 
Byrne  v.  Reid,  9. 


O. 


Cadenasso  v.  Antonelle,  31. 
Caldicott  v.  Griffiths,  54. 
Caldwell  v.  Leiber,  164. 

v.  Stileman,  69. 
Calkins  v.  Smith,  244. 
Cameron  v.  Blackman,  188. 
Camp  v.  Grant,  288. 
Campbell  v.  Bowen,  194. 

v.  Campbell,  170. 

v.  Colorado  Coal  &  Iron  Co., 
106. 

v.  Mullett,  57. 
Canada  v.  Barksdale.  94. 
Canales  v.  Perez,  138. 
Cannon   v.  Brush  Elec.  Co.,   21, 

62. 
Capen  v.  Barrows,  253. 
Capper's  Case,  60. 
Caris  v.  Nimmons,  182. 
Carleton  v.  Jenness,  284. 
Carlton  v.  Cummins,  265. 
Carpenter  v.  Greenop,  251. 
Carr  v.  Catlin,  281. 


TABLE  OF  CASES. 


307 


References  are  to  pages. 


Carr  v.  Hertz,  194. 

v.  Leavitt,  86. 
Carroll  v.  Evans,  269. 
Carter,  Ex  parte,  238. 
Carter  v.  Bradley,  131. 

v.  Carter,  4G,  93. 

v.  Home,  155. 

v.  McClure,  290. 

v.  Rowland,  269. 

v.  Whalley,  215. 
Carver  Gin  &  Mach.  Co.  v.  Ban- 

non,  224. 
Case  v.  Abeel,  286. 

v.Beauregard,  131,  176,  224, 
226,  231,  232. 
Casey  v.  Carver,  180,  247. 
Cash  v.  Earnshaw,  272,  273. 
Casola  v.  Kugelman,  298. 
Cassels  v.  Stewart,  156. 
Cassidy   v.   Hall,   18,   30,   31,   67, 

71,  73. 
Castle  v.  Bullard,  201. 
Caston  v.  Drake,  95. 
Catskill  Bank  v.  Gray,  91. 
Cavander  v.  Bulteel,  177. 
Cedarburg  v.  Guernsey,  41. 
Central    Bank    of    London,    Ex 

parte,  212. 
Central      City      Sav.     Bank     v. 

Walker,  6,  21,  62. 
Central  Trust  &  Safe  Deposit  Co. 

v.  Respass,  95. 
Chamberlain   v.   Jackson,   49. 

v.  Sawyers,  117,   163. 
Champion  v.   Bostwick,   41,   122, 

201. 
Chandler  v.  Higgins,  221. 
Channel  v.  Fassitt,  6,  12. 
Chapman  v.  Hughes,  22,  24. 

v.  Lipscomb,   30. 
Chappie  v.  Cadell,  150. 

v.  Davis,  188. 
Charlton  v.  Sloan,  170. 
Charman  v.  Henshaw,  103. 


Chase  v.  Barrett,  47. 

v.  Stevens,  49,  57. 
Cheap  v.  Cramond,  13,  14. 
Cheesman  v.  Price,  273. 
Cheetham  v.  Ward,  219. 
Chester    v.     Dickerson,    86,    94, 

200,  201. 
Chick  v.  Robinson,  295,  296. 
Childers  v.  Neely,  10,  11. 
Chippendale,  Ex  parte,  160,  161, 

166,  199. 
Chisholm  v.  Cowles,  48. 
Chittenden  v.  Witbeck,  155. 
Choppin  v.  Wilson,  137. 
Chouteau  v.  Raitt,  35. 
Christ  v.  Firestone,  188. 
Christian  &  Craft  Grocery  Co.  v. 

Hill,  160. 
Christy  v.  Sill,  8. 
Church  v.  First  Nat.  Bank,  245, 
246,  247. 

v.  Knox,  139. 

v.  Sparrow,  190. 
Citizens'  Bank  v.  Williams,  223. 
Citizens'    Fire    Ins.    etc.    Co.    v. 

Doll,  115. 
Citizens'   Nat.   Bank  v.  Wehrle, 

224. 
City  Bank  v.  McChesney,  216. 
City  Nat.  Bank  v.  Stone,  22. 
City  of  Maquoketa  v.  Willey,  225. 
City  of  Opelika  v.  Daniel,  241. 
Clafflin  Co.  v.  Evans,  192. 
Clagett  v.  Kilbourne,  139. 
Clapp  v.  Lacey,  293,  294. 

v.  Rogers,  216. 
Clark  v.  Amoskeag  Mfg.  Co.,  250. 

v.  Billings,   220. 

v.  Carr,  269. 

v.  Houghton,  104. 

v.  Reed,  279. 

v.  Worden,  166,  167. 
Clark's  Appeal,  113. 
Clarke  v.  Bickers,  287. 


30  S 


TABLE  OF  CASES. 


References  are  to  pages. 


Clarke  v.  Wallace,  192. 
Clay   v.   Field,  280. 

v.  Freeman,  129. 
Clayton  v.  Davett,  160,  162. 

v.  May,  208. 
Clayton's  Case,  204,  218,  219. 
Cleather  v.  Twisden,  203. 
Clegg  v.  Edmonson,  258. 
Clement     v.     British     American 
Assur.  Co.,  197. 

v.  Clement,  214,  277. 
Clements  v.  Jessup,  113, 137,  225. 

v.  Norris,  172,  194. 
Cleveland  v.  Woodward,  196. 
Cleveland  Paper  Co.  v.   Courier 

Co.,  91. 
Clift  v.  Barrow,  39,  41. 
Clifton  v.  Howard,  35,  36. 
Clough,  In  re,  191,  275. 
Coakley's  Adm'r  v.  Hazelwood's 

Ex'r,  285,  286. 
Coates  v.  Preston,  207. 
Cobb  v.  Benedict,  252. 
Cochran    v.    Anderson    Co.    Nat. 
Bank,  80. 

v.  Arnold,  63. 

v.  Cunningham's     Ex'r,    245, 
246. 

v.  Hirsch  Bros.,  109. 

v.  Perry,  8,  291. 
Cochrane  v.  dishing,  284. 
Cocke   v.   Branch   Bank   at   Mo- 
bile, 190. 

v.  Evans'  Heirs,  116. 
Cockerham  v.  Bosley,  283,  286. 
Codding,  In  re,  143. 
Coe  v.  Simmons  Boot  &  Shoe  Co., 

229. 
Coffin's  Appeal,  297. 
Coggswell  v.  Coggswell,  265. 
Cohn  v.  Hessel,  169. 
Coldren  v.  Clark,  168. 
Cole  v.  Fowler,  251. 

v.  Moxley,  267. 


Cole  v.  Reynolds,  253. 

Coleman  v.  Coleman,  155. 
v.  Eyre,  85,  92. 

Coles  v.  Coles,  131. 

Collingwood   v.  Berkeley,  68. 

Collins*  Appeal,  128. 

Collman  v.  Mills,  200. 

Collner  v.  Greig,  119. 

Collumb  v.  Read,  143,  146. 

Columbia  Bank  v.  Berolzheimer, 
299. 

Columbia   Land   &  Cattle  Co.  v. 
Daly,  297. 

Commercial  Bank  v.  Jones,  220. 
v.  Miller,  276. 

Commercial  Nat.  Bank  v.  Proc- 
tor, 112.      , 

Commonwealth  v.  Bennett,  30. 
v.  Bracken's  Heirs,  285. 

Corns  toe  k  v.  Buchanan,  156,  269. 
v.  McDonald,  144,  285. 

Conklin  v.  Tuthill,  30. 

Connor  v.  Allen,  280. 

Conrader  v.  Cohen,  237. 

Conroy  v.   Campbell,  116. 

Const  v.  Harris,  150,  172,  173. 

Continental     National    Bank    v. 
Strauss,  88,  297. 

Conwell  v.  McCowan,  221. 

Cook,  Ex  parte,  233,  235. 

Cook,  In  re,  226. 

Cook  v.  Carpenter,  6,  51?. 
v.  Collingridge,    134,   135. 
v.  Penrhyn  Slate  Co.,  66,  71, 
72. 

Cooke  v.  Benbow,  167. 

Cookson  v.  Cookson,  141. 

Coope  v.  Eyre,  39,  56. 

Cooper  v.  Nelson,  251. 

Cooper's  Appeal,  228. 

Copland,  Ex  parte,  236. 

Copland  v.  Toulmin,  117. 

Corbett,  Ex  parte,  97. 

Corder  v.  Steiner,  281. 


TABLE  OF  CASES. 


309 


References 

Corey  v.  Cadwell,  94. 

v.  Perry,  222. 
Cornells  v.  Stanhope,  245,  246. 
Corner  v.  Mackey,  210. 
Cory  v.  Long,  176. 
Cory  Bros.  &  Co.  v.  Owners  of 

the  Mecca,  218,  219. 
Cossack  v.  Burgwyn,  19. 
Coster  v.  Clarke,  132. 
Costley    v.    Wilkerson's    Adm'r, 

284. 
Cothran  v.  Marmaduke,  38,  47. 
Cottle  v.  Leitch,  273. 
Cottrell     v.     Babcock     Printing 

Press  Mfg.  Co.,  112. 
Cotzhausen  v.  Judd,  184,  247. 
Couch  v.  Mills,  219. 

v.Woodruff,  25. 
Course  v.  Prince,  256. 
Coursin's  Appeal,  57,  152,  154. 
Court  v.  Berlin,  187,  213. 
Courtenay  v.  Wagstaff,  53. 
Cowan  v.  Gill,  238. 

v.  Roberts,  216. 
Cowles  v.  Robinson,  250. 
Cox  v.  Delano,  26. 

v.  Gille  Hardware  &  Iron 
Co.,  206,  248. 

v.  Hickman,  3,  12,  13,  16,  17, 
18,  19,  20,  21,  26,  28,  29, 
33,  34,  35,  37,  180,  184. 

v.  Hubbard,  242. 

v.Russell,  139. 

v.  Swofford  Bros.  Dry  Goods 
Co.,  192. 
Craft  v.   McConoughy,  95. 
Cragg  v.  Ford,  160. 
Craig  v.  Hulschizer,  245,  2-t6. 
Craighead  v.  Pike,  134. 
Crane  Co.  v.   Tierney,  183,  184, 

188. 
Crane's  Estate,  In  re,  283. 
Crater  v.  Bininger,  252,  254,  291. 
Craven  v.  Edmondson,  275. 


are  to  pages. 

Crawford    v.    Collins,    106,    107, 

240. 
Crawshay   v.    Collins,    116,    133, 
148,   149. 

v.  Maule,    11,    122,    125,    134, 
141,  261,  265,  288. 
Crazebrook,  Ex  parte,  239. 
Credit     Mobilier     v.     Common- 
wealth, 47. 
Crescent  Ins.  Co.  v.  Bear,  96. 
Croft  v.  Pyke,  177. 
Crompton  v.  Conkling,  222. 
Crone  v.  Crone,  121. 
Crooker  v.  Crooker,  176,  233. 
Croone  v.  Bivens,  226. 
Crosby  v.  Jeroloman,  206. 

v.  Timolat,  253. 
Cross  v.   Burlington  Nat.   Bank, 
100. 

v.  Jackson,  291. 

v.  Pinckneyville  Mill  Co.,  62. 
Crosswell  v.  Lehman,  155. 
Crosthwaite  v.  Ross,  189. 
Crouch  v.  Bowman,  105. 

v.  First  Nat.  Bank,  295. 
Crowder,  Ex  parte,  234. 
Crozier  v.  Kirker,  103. 
Culley  v.  Edwards,  22,  31. 
Cumming's  Appeal,  228. 
Cummings  v.  Mills,  39. 
Cumpston  v.  McNair,  48. 
Cundey  v.  Hall,  121. 
Cunningham  v.  Littlefield,  255. 
Currey  v.  Warrington,  207,  287. 
Curry  v.  Fowler,  30,  31. 
Curtis  v.  Hollingshead,  100,  206. 

v.Woodward,  222,  236. 
Cushing  v.  Smith,  198. 
Cushman  v.  Bailey,  14. 

D. 

Daby  v.  Ericsson,  129,  284. 
Dake  v.  Butler,  32. 


310 


TABLE  OF  CASES. 


K.-feivnet's 

Dale  v.  Hamilton,  86,  92. 

v.  Pierce,  31. 
Dalton  City  Co.   v.  Dalton  Mfg. 
Co.,  14,  16. 

v.  Hawes,  14,  16. 
Daniel  v.  Crowell,  228,  233. 

v.  Daniel,  247. 

v.  Ownes,  139. 
Darby  v.  Darby,  126,  133,  141. 

v.  Gilligan,  223,  225,  226. 
Darrow  v.  Calkins,  141,  142,  143, 

144,  145,  146. 
Dart  v.  Laimbeer,  255. 
David  v.  Ellice,  220. 
Davies  v.  Atkinson,  178. 

v.  Games,  123. 

v.  Harvey,  202. 
Davis,  Ex  parte,  52. 
Davis  v.  Berger,  191. 

v.  Church,  284. 

v.Davis,  22,  121,  123,  127. 

v.  Dodson,  187. 

v.  Gelhaus,  95. 

v.  Howell,  234,  235. 

v.  Hubbard,  240. 

v.  Poland,  277. 

v.  Smith,  146. 

v.  White,  138. 
Davis'  Estate,  279. 
Dawson  v.  Parsons,  121. 
Dawson,     Blackmore     &     Co.    v. 

Elrod,  194. 
Day  v.  Lockwood,  167. 

v.  Stevens,  30,  35,  41,  44,  66. 
Deal  v.  Bogue,  138,  139. 
Dean  v.  Dean,  114. 

v.  Macdowell,  157,  158. 
Dear,  Ex  parte,  235. 
Deardorf  s  Adm'r  v.  Thacher,  78, 

183,  190. 
De  Berenger  v.  Hamel,  273. 
De  Berkom  v.  Smith,  66,  67. 
Decker  v.  Howell,  11. 
De  Cordova  v.  Powter,  30. 


are  to  pagea 

Deitz  v.  Regnier,  78,  189. 
Delhasse,  Ex  parte,  22. 
Delise  v.  Palladino,  242. 
Dell,  In  re,  239. 

Delmonico  v.  Guillaume,  125,  132. 
Denholm  v.  McKay,  286. 
Denithorne  v.  Hook,  67,  71. 
Densmore  v.  Mathews,  49. 
Densmore  Oil  Co.  v.   Densmore, 

153. 
Denver  v.  Roane,  163,  164,  281. 
Desha  v.  Holland,  242. 
De  Tastet  v.  Shaw,  98. 
Devaynes  v.  Noble,  204. 
DeWit  v.  Lander,  242. 
Dexter  v.  Dexter,  261,  282. 
Dial  v.  Neuffer,  89. 
Dickinson  v.  Dickinson,  89,  214. 

v.  Valpy,  72,  189,  248. 
Dickson  v.  Cass,  275. 
Digby,  Ex  parte,  14. 
Digg's  Adm'r  v.  Brown,  177. 
Dilworth  v.  Mayfield,  176. 
Dimon  v.  Hazard,  226. 
Dimond  v.  Henderson,  168. 
Divine  v.  Mitchum,  176. 
Dob  v.  Halsey,  206,  242,  247. 
Doggett  v.  Dill,  234,  287. 

v.  Jordan,  48. 
Donaldson  v.  State  Bank,  128. 

v.Williams,  172,  188. 
Donelson's      Administrators      v. 

Posey,  176. 
Doner  v.  Stauffer,  139,  231. 
Donley  v.  Hall,  29. 
Donally  v.  Ryan,  199. 
Donnell  v.  Jones,  244. 
Dore  v.  Wilkinson,  188. 
Doty  v.  Patterson,  62. 
Dougherty  v.  Van  Nostrand,  110, 

111,  279. 
Dounce  v.  Parsons,  204. 
Douthit  v.  Douthit,  254. 
Dow  v.  Dempsey,  38. 


TABLE  OF  CASES. 


311 


References  are  to  pages. 


Dow    v.    State   Bank    of    Sleepy 

Eye,  50,  52. 
Downs  v.  Jackson,  159. 
Doyle  v.  Bailey,  50,  51. 

v.  Burns,  11. 
Drake  v.  Elwyn,  105,  197. 
Dressel  v.  Lonsdale,  90. 
Drew  v.  Ferson,  163. 
Driver  v.  Burton,  244. 
Dry  v.  Boswell,  41,  44. 
Du  Bree  v.  Albert,  132. 
Duck  v.  Mayeu,  219. 
Duff  v.  Maguire,  251. 
Duffield  v.  Brainard,  261. 
Duffy  v.  Gray,  244. 
Dundas  v.  Gallagher,  279. 
Dunham  v.  Loverock,  57. 

v.  Presby,  95. 
Dunne  v.  English,  156. 
Dunnell  v.  Henderson,  115. 
Dupuy   v.   Leavenworth,   125. 

v.  Sheak,  89. 
Durant  v.  Abendroth,  295,  296. 

v.  Pierson,  261,  283. 

v.  Rogers,  202. 
Durborrow's  Appeal,  128. 
Duryea  v.  Burt,  10,  11,  176. 

v.  Whitcomb,  22. 
Dutton  v.  Morrison,  140,  235. 
Dwinel  v.  Stone,  25,  26,  35. 
Dyer  v.  Clark,  121,  125,  126,  129, 
130,    131,    143,    145,    228, 
261. 

v.  Munday,  200. 

v.  Sutherland,  191. 
Dyke  v.  Brewer,  210,  213. 

E. 

Eager  v.  Crawford,  30. 

Eagle  v.  Bucher,  265. 

Eagle  Mfg.  Co.  v.  Jennings,  220. 

Eakin  v.  Shumaker,  155. 


Earle  v.  Art  Library  Pub.   Co., 

21,  28,  69,  136,  226. 
Early  v.  Burt,  220. 
Eastman  v.  Clark,  3,  15,  17,  19, 
28,  30,  32,  41. 

v.  Cooper,  183. 
Easton  v.  Strouther,  155. 
Eastwood  v.   Bain,   250. 
Eaton  v.  Walker,  61,  62. 
Eckert  v.  Clark,  163. 
Eddins  v.  Menefee,  162. 
Edens  v.  Williams,  255. 
Edgar  v.  Caldwell,  139. 

v.  Cook,  261. 
Edgerton  v.  Preston,  107. 
Edison  Electric  Illuminating  Co. 

v.  DeMott,  229. 
Edwards  v.  Dillon,  192,  198. 

v.  Dooley,  30. 

v.  Thomas,   261. 

v.Tracy,  13,  16,  18,  31,  181, 
184. 
Egberts  v.  Wood,  261,  283. 
Eich  v.  Sievers,  285. 
Eichbaum  v.  Irons,  54. 
Einstein  v.  Schnebly,  272. 
Einstman  v.  Black,  202. 
Elderkin  v.  Winne,  6. 
Eldridge  v.  Troost,  77. 
Eliot  v.  Himrod,  63,  290,  298. 
Elliot  v.  Stevens,  237. 
Elliott  v.  Holbrook,  219. 
Ellis  v.  Schmaeck,  68. 
Ellis'  Adm'r  v.  Bronson,  212,  215. 
Ellison  v.  Sexton,  217. 

v.Stuart,   27,   29,   31,  48,   70, 
84,  85,  181,  187,  188,  208, 
209. 
Ellsworth  v.  Pomeroy,  29. 
Elmira  Iron  &  Steel  Rolling  Mill 
Co.  v.  Harris,  80,  ISO,  215,  216. 
Emanuel  v.  Bird,  234,  236. 
Emerson  v.  Durand,  164,  165. 

v.  Senter,  283. 


312 


TABLE  OF  CASES. 


References  are  to  pages. 


Emery  v.  Parrott,  156. 

v.Wilson,  255. 
Emly  v.  Lye,  199. 
England  v.  Curling,  150,  257,  258, 

259. 
Englar  v.  Offutt,  204. 
Englis  v.  Furniss,  251,  253. 
Enix  v.  Hays,  242. 
Ernest  v.  Nicholls,  16. 

v.  Woodworth,  139. 
Erwin's  Appeal,  126. 
Eshleman  v.  Harnish,  32. 
Esmond  v.  Seeley,  153. 
Esposito  v.  Bowden,   263. 
Essex  v.  Essex,  141,  151. 
Estabrook   v.   Messersmith,    245, 

246. 
Estate  of  Winters,  5. 
Estes,  In  re,  234. 
Eustis  v.  Bolles,  214,  262. 
Evans  v.  Evans,  280. 

v.  Hanson,  113,  149. 

v.  Hawley,  176. 

v.Warner,  136,  163. 

v.  Watts,  282. 
Everett  v.  Coe,  41,  43. 
Everhart's  Appeal,  86. 
Everit  v.  Watts,  89. 
Everitt  v.   Chapman,   41,  43,   48, 

209. 
Ewing  v.  Osbaldiston,  177. 
Exchange  Bank  v.  Gardner,  170. 

v.  Tracy,  261. 
Eyre,  Ex  parte,  203. 

F. 

Fairbank  v.  Leary,  94. 

Fairchild  v.  Fairchild,  86,  119, 
120,  141,  143,  145. 

Faith  v.  Richmond,  197. 

Fall  River  Whaling  Co.  v.  Bor- 
den, 145. 

Faneuil  Hall  Nat.  Bank  v.  Me- 
loon,  219. 


Fanning  v.  Chadwick,  252. 
Farley  v.  Lovell,  245,  246,  247. 
Farmer  v.  Bank  of  Wickliffe,  186. 

v.  Putnam,  256. 
Farmers'  Bank  v.  Bayliss,  106. 
Farmers'  Ins.  Co.  v.  Ross,  48,  56. 
Farnsworth,  v.  Boardman,  297. 
Farr  v.  Johnson,  136. 
Farrar  v.  Deflinne,  215. 
Farrell  v.  Friedlander,  202. 
Farwell   v.    St.   Paul   Trust   Co., 
178. 

v.  Tyler,  252. 
Faulds  v.  Yates,  125,  146,  172. 
Faulkner  v.  Brigel,  243. 
Fawcett  v.  Osborn,  94. 
Fay  v.  Burditt,  88. 

v.  Noble,  62. 

v.  Waldron,  8,  84. 
Fayette  Nat.  Bank  v.  Kennedy's 

Assignee,  236. 
Fear,  In  re,  226. 
Featherstonhaugh     v.     Fenwick, 

133,  134,  135,  265. 
Fechteler  v.  Palm  Bros.   &  Co., 

37,  91. 
Fellows  v.  Wyman,  276. 
Felt  v.  Cleghorn,  138,  140. 
Felton  v.  Deall,  32. 
Fennell  v.  Myers,  289. 
Fereday  v.  Hordern,  39,  41. 

v.  Wightwick,  123. 
Ferguson  v.  Baker,  251. 
Fergusson  v.  Fyffe,  182. 
Ferrero  v.  Buhlmeyer,  269. 
Ferris  v.  Thaw,  63,  103. 
Ferson  v.   Monroe,  231. 
Fettretch  v.  Armstrong,  275. 
Fewell  v.  American  Surety  Co., 

140. 
Fifth  Ave.  Bank  v.  Colgate,  299. 
Filburn  v.  Ivers,  154,  155. 
Filley  v.  Phelps,  131. 
Firemen's  Ins.  Co.  v.  Floss,  249. 


TABLE  OF  CASES. 


313 


References 

First  Nat.  Bank  v.  Almy,  62. 

v.  Rowley,  187. 

v.  Strait,  264. 

v.Whitney,   297. 

v.Wood,  255. 
Fish  v.  Thompson,  117. 
Fisher  v.  Allen,  284. 

v.Bowles,  66. 

v.  Syfers,  223,  224. 
Fisk  v.  Fisk,  112. 
Fitch  v.  Harrington,  12. 
Fitzgerald  v.  Christl,  223,  226. 

v.  Grimmell,  100. 
Fitzpatrick  v.  Flannagan,  231. 
Flagg  v.  Stowe,  63,  122,  136. 
Flanagan  v.  McAffee,  139. 
Fleischmann  v.  Gottschalk,  135, 

136. 
Fleming  v.  Dorn,  68. 
Flemyng  v.  Hector,  54. 
Fletcher  v.  Ingram,  157,  249. 

v.  Pullen,  67,  68,  70,  71. 

v.  Reed,  265. 
Flower  v.  Barnekoff,  47,  86,  94. 
Folk  v.  Wilson,  106. 
Folsom  v.  Marlette,  168. 
Forbes  v.  Garfield,  277. 

v.  Webster,  159. 
Fordyce  v.  Shriver,  170. 
Forney  v.  Adams,  247. 
Forrer  v.  Forrer's  Ex'rs,  155. 
Forrester  v.  Oliver,  282. 
Forster  v.  Hale,  86. 

v.  Mackreth,    187. 
Forsyth  v.  Woods,  95,  232. 
Foster  v.  Barnes,  230. 

v.  Field,  228. 

v.  Sargent,  121. 
Foster's  Appeal,  143. 
Fountain  v.  Hutchinson,  131. 
Fourth  Nat.  Bank  v.  Altheimer, 

37,  38. 
Fourth   St.   Nat.   Bank  v.  Whit- 
aker,  299. 


are  to  pages. 

i   Fox  v.  Clifton,  8. 

v.  Curtis,  182. 

v.  Hanbury,  275. 
Franklin   Sugar  Refining  Co.   v. 

Henderson,  225. 
Frazer  v.  Linton,  136. 
Freeman  v.  Abramson,  188. 

v.  Bloomfield,  4,  5,  67. 

v.  Hemenway,  269. 

v.  Stewart,   176. 
French  v.  Styrnig,  43,  56,  57. 
French  Spiral  Spring  Co.  v.  New- 
England  Car  Trust,  292. 
Frey  v.  Eisenhart,  282. 
Friend  v.  Duryee,  78,  189. 
Fromont  v.  Coupland,  46. 
Frost  v.  Walker,  291. 
Frow's  Estate,  230. 
Fuller  v.  Ferguson,  76,  90. 

v.  Rowe,   62,  64. 
Fuller  &  Fuller  Co.  v.  McHenry, 

90. 
Fulmer's  Appeal,  116. 
Fulton  v.  Central  Bank  of  Pitts- 
.  burg,  277. 


a. 


Gabriel  v.  Evill,  52,  210. 

Gadsden  v.  Carson,  227. 

Gage  v.  Parmalee,  150,  167,  169. 

v.  Rogers,  216. 
Galbraith  v.  Gedge,  143,  145. 

v.Tracy,   113,   284,   286. 
Gallagher's  Appeal,  227. 
Gait's    Ex'r    v.    Calland's    Ex'r, 

249. 
Galway  v.  Nordinger,  248. 
Ganson  v.  Lathrop,  229,  234. 
Gardiner  v.  Childs,  46,  188. 
Garnett  v.  Richardson,  63. 
Garretson  v.  Brown,  277,  279. 
Garrett  v.  Handley,  243. 

v.  Republican  Pub.  Co.,  32. 


3U 


TABLE  OF  CASES. 


Referenoea  are  to  pages. 


Gartside  Coal  Co.  v.  Maxwell,  63, 

64. 
Gasely  v.  Separatists'  Soc.  76. 
Gass  v.  New   York,  P.   &  B.   R. 

Co.,  45. 
Gaston  v.  Drake,  95. 
Gates  v.  Beecher,   274. 

v.  Hughes,  197. 

v.  Watson,  250. 
Gathright  v.  Burke,  216. 
Gay,  In  re,  222. 
Gay    v.  Seibold,  107,  109. 

v.  Waltman,  191. 
Gearing  v.  Carroll,  295,  296. 
Geddes  v.  Wallace,  92,  150. 
Gedge  v.  Cromwell,  181. 
George  v.  Carpenter,  297. 
Gerard  v.  Bates,  139. 

v.  Gateau,  272,  273. 
Getchell  v.  Foster,  35,  103,  108. 
G.    H.    Haulenbech    Advertising 

Agency  v.  November,  183. 
Gibb's  Estate,  in  re,  3,  4,  18,  29, 

30,   37,  62,   65,  298. 
Gibbs  v.  Humphrey,  231. 
Gibson  v.  Lupton,  56. 

v.  Stone,  44. 

v.  Warden,  191,  192. 
Giddings  v.  Palmer,  177. 
Gilbert  v.  Lichtenburg,  243. 
Gilchrist  v.  Brande,  215. 
Gill  v.  Ferris,  269. 

v.  First  Nat.  Bank,  201. 

v.  Kuhn,  15,  23,  25,  52. 
Gillan  v.  Morrison,  160. 
Gillaspy  v.  Peck,  228. 
Gille  v.  Hunt,  104,  124. 
Gillilan  v.  Sun  Mut.  Ins.  Co.,  191, 

194,  275,  279. 
Gillingham  v.  Beddow,  112. 
Gilman  v.  Cunningham,  57. 

v.  Vaughan,  167. 
Gilmore  v.  Ham,  277,  278. 
Gilpin  v.  Enderbey,  39. 


Gilruth  v.  Decell,  204,  205. 
Givens  v.  Berry,  151,  269. 
Gleason  v.  Chicago,  M.  &  St.  P, 
R.  Co.,  156. 
v.  McKay,  290. 
Glenn  v.  Arnold,  222. 

v.  Bergman,  63. 
Glore  v.  Dawson,  37. 
Goble  v.  Gale,  242. 
Goddard  v.  Hodges,  5,  12. 
Goddard-Peck  Grocery  Co.  v.  Mc- 

Cune,  224,  226. 
Godfrey  v.  White,  143,  163,  168. 
Goell  v.  Morse,  56. 
Goembel  v.  Arnett,  178. 
Goertner  v.  Trustees  of  Canajo- 

harie,  274,  275. 
Goesele  v.  Bimeler,  76. 
Goldsmith  v.  Eichold,  153. 
Goldthwait  v.  Janney,  126. 
Goodburn  v.  Stevens,  143,  145. 
Goodman  v.  Whitcomb,  272. 
Goodnow  v.  Empire  Lumber  Co., 

88. 
Goodson  v.  Goodson,  281. 
Goodspead  v.  South  Bend  Chilled 

Plow  Co.,  212,  276. 
Gordon  v.  Albert,  275. 
v.  Bankard,  104. 
v.  Boppe,  255. 
v.  Freeman,    262. 
v.  Funkhouser,  198. 
Gordon's  Estate,  230. 
Gorman  v.  Davis  &  Gregory  Co., 
215. 
v.  Russell,  175. 
Gossett  v.  Kent,  124. 
Gottschalk  v.  Smith,  94. 
Gough  v.  Davies,  220. 
Gould  v.  Banks,  264. 
Gow  v.  Hinton,  138. 
Gowan  v.  Tunno,  288. 
Grace  v.  Smith,  13,  14,  15,  17,  18, 
27,  31. 


TABLE  OF  CASES. 


315- 


References 

Graham  v.  Holt,  251. 

v.  Hope,  216. 

v.  Meyer,  201. 
Grant  v.  Hardy,  156. 

v.  Shurter,  284. 
Graser  v.  Stellwagen,  188. 
Graves  v.  Kellenberger,  189. 
Gray  v.  Chiswell,  235,  287. 

v.Gibson,   7,  21,  51. 

v.  Green,  274. 

v.  Palmer,  76,  125,  126,  143, 
145,  280. 

v.Ward,  190. 
Gray's  Estate,  in  re,  236,  288. 
Great  Western  R.  Co.  v.  Preston 

&  B.  R.  Co.,  32. 
Greatrex  v.  Greatrex,  168. 
Greeley  v.  Wyeth,  245,  246. 
Greene  v.  Butterworth,  234. 

v.Graham,   131,   134. 
Greenslade  v.  Dov/er,  189. 
Gregg  v.  Hord,  150. 
Gresham  v.  Harcourt,  286. 
Griffith  v.  Buck,  225. 
Griggs  v.  Clark,  136. 
Grinton  v.  Strong,  35. 
Griswold  v.  Haven,  182. 

v.  Waddington,  193,  214,  261. 
263,  271,  288. 
Groenendyke  v.  Coffen,  258. 
Grollman  v.  Lipsitz,  105. 
Grotte  v.  Weil,  221. 
Grover  v.  Smith,  247. 
Groves  v.  Wilson,  296. 
Grund  v.  Van  Vleck,  202. 
Guckert  v.  Hacke,  63. 
Guidon  v.  Robson,  242. 
Guild  v.  Belcher,  210. 
Guillou  v.  Peterson,  203,  204. 
Gulf  City  Shingling  Co.,  v.  Boy- 

les,  28. 
Gulick  v.  Gulick,  91. 
Gumbel  v.  Abrams,  208. 
Gunn  v.  Black.  279. 


are  to  pages. 

Gunn  v.  Central  R.  R.  90. 
Gunnison   v.   Erie   Dime   Sav.   & 

Loan  Co.,  127. 
Gurr  v.  Martin,  44. 
Gwens  v.  Berry,  170. 
Gwynn  v.  Duffield,  202. 
Gyger's  Appeal,  165. 

H. 

Habicht  v.  Pemberton,  291. 
Hackett   v.    Stanley,    13,    14,   18r 

30,  31,  40,  47. 
Hackley  v.  Patrick,  276,  278. 
Haddock  v.   Crocheron,   278. 

v.  Grinnell  Mfg.  Crop.,  298. 
Haeberly,  Appeal  of,  143,  265. 
Hagar  v.  Stone,  250. 
Hage  v.  Campbell,  224. 
Haggerty  v.  Foster,  296. 

v.  Taylor,   299. 
Haggett  v.  Hurley,  90. 
Haine's  Estate,  In  re,  100. 
Hair   Co.,   James   T.   v.   Thome,. 

243. 
Hale  v.  Wilson,  254. 
Haley  v.  Case,  201. 
Hall  v.  Clagett,  168. 

v.  Cook,  207. 

v.  Edson,  50. 

v.Kimball,  253. 

v.  Lanning,  192. 

v.  Sannoner,  148. 

v.  White,  74. 
Hallack  v.  March,  191. 
Hallett  v.   Cumston,  112. 
Hallett's  Estate,  In  re,  219. 
Halsey  v.  Norton,  262. 
Hamilton,  In  re,  91,  238. 

v.Smith,  60. 
Hammond,  Ex  parte,  222. 

v.  Douglass,  111. 
Hamper,  Ex  parte,  13,  15,  22. 
Hamsmith  v.  Epsy,  208. 


316 


TABLE  OF  CASES. 


References  are  to  pages. 


Hanchett  v.  Gardner,  188. 
Hamlin  v.  Davis,  50. 
Haney  Mfg.  Co.  v.  Perkins,  201. 
Hannaman   v.   Knrrick,  267. 
Hanover    Nat.    Bank    v.    Klein, 

224. 
Hapgood    v.    Cornwall,   176,    178, 

230,  233. 
Hardin  v.  Dolge,  126. 
Harding,  Ex  parte,  206. 
Hargadine  v.  Gibbons,  281,  285. 
Hargadine-McKittrick  Dry  Goods 

Co.  v.  Belt,  223,  224,  229. 
Harlow  v.  La  Brum,  153. 
Harman  v.  Johnson,  203. 
Harmon  v.  Clark,  237. 
Harris  v.  Carter,  136. 

v.  Crary,  81. 

V.Harris,  125,  143,  255. 

v.  Phillips,  137. 

v.  Visscher,  97. 
Harris     County     v.     Donaldson, 

190. 
Harrison  v.  Bevington,   214. 

v.  Heathorn,  290. 

v.  Jackson,  191,  198. 

v.  McCormack,  241. 

v.  Tennant,   272,   273. 
Hart  v.  Bowen,  284. 

v.  Hart,  122. 

v.  Kelley,  32. 

v.  Woodruff,  276. 
Hartman  v.  Woehr,  51,  166,  167, 

267. 
Hartnett  v.  Stillwell,  131. 
Hartney  v.  Gosling,  10,  11. 
Harvey  v.  Childs,  19,  20,  27. 

v.  Varney,  95. 
Hasbrouck  v.  Childs,  116,  117. 
Haskell   v.   Adams,   251. 
Haskins  v.  Burr,  51. 

v.  D'Este,  99,  102,  103. 
Hastings  Nat.  Bank  v.  Hibbard, 
198. 


Hatch  v.  Wood,  242,  249. 
Haulenbeck  Advertising  Agency, 

G.  H.  v.  November,  183. 
Haven  v.  Wakefield,  253. 
Havens  v.  Hussey,  262. 
Hawk  Eye  Woolen  Mills  v.  Conk- 

lin,  223,  230. 
Hawkins  v.  Lasley,  241. 
Hawley  v.  Campbell,  222. 

v.  Dixon,   32. 
Hawtayne  v.  Bourne,  184,  199 
Hayden,  Ex  parte,  237. 
Hayes  v.  Heyer,  278,  297. 

v.  Vogel,  47. 
Haynes  v.  Carter,  216. 
Hayward  v.   Barron,   21,   25,  30, 

84. 
Hazard  v.  Hazard,  22. 
Hazelton  Boiler  Co.  v.  Hazelton 

Tripod  Boiler  Co.,  109. 
Heap  v.  Dobson,  210. 
Heath  v.  Percival,  221. 
v.  Sansom,  215,  269. 
v.  Waters,  163,  286. 
Heartt  v.  Walsh,  187,  274. 
Heckard  v.  Fay,  163. 
Heckert  v.  Fegely,  210. 
Hedge's    Appeal,    4,    11,    50,    CO, 

290,  291. 
Hedley  v.  Bainbridge,  78,  189. 
Hefferlin  v.   Karlman,   186. 
Hefner  v.  Palmer,  71. 
Heimstreet  v.    Howland,   32,   41, 

44. 
Heineman  v.  Hart,  225. 
Helme  v.  Smith,  57. 
Hemenway  v.  Burnham,  251. 
Henderson  v.  Kissam,  284. 
Hendren  v.  Wing.  124. 
Hendrick  v.  Gunn,  45. 
Hendry  v.  Turner,  213. 
Hendy  v.  March,  35,  58. 
Henkel  v.  Heyman,  295. 
Henn  v.  Walsh,  272. 


TABLE  OF  CASES. 


31T 


References 

Henrickson  v.  Reinbach,  136. 
Henry  v.  Anderson,  100,  132. 

v.  Bassett,  136. 

v.  Jackson,  54,  150. 
Hershfield  v.  Claflin,  138,  HO. 
Hess  v.  Lowrey,  201. 

v.  Werts,  291. 
Hey  v.  Harding,  255. 
Heydon  v.  Heydon,  138. 
Heyhoe  v.  Burge,  13,  41. 
Hichens  v.  Congreve,  153. 
Hicks  &  Co.  v.  Cram,  72. 
Hier  v.  Kaufman,  192. 
Higgins  v.  Armstrong,  10. 
Hill  v.  Beach,  63,  176,  239. 

v.  Cornwall   &   Bro.'s   Assig- 
nee,  145. 

v.  Draper,  129. 

v.  King,  166. 

v.  Miller,  154. 

v.  Palmer,   255. 

v.  Stetler,  298. 
Hilliker  v.  Loop,  242. 
Hillock    v.     Traders'    Ins.     Co., 

187. 
Hills  v.  M'Rae,  287. 
Hilton  v.  Vanderbilt,  274,  27S. 
Hinds,  Ex  parte,  121. 
Hinman  v.  Littell,  67. 
Hinton  v.  Law,  58. 

v.  Odenheimer,  217. 
Hiscock  v.  Phelps,  113,  126,  177. 
Hitchings   v.   Ellis,   25. 
Hite  Natural  Gas   Co.'s  Appeal, 

298. 
Hoadley  v.  County  Commission- 
ers, 101,  290. 
Hoagland's  Estate,  In  re,  52. 
Hoaglin  v.  Henderson,  90,  137. 
Hoard  v.  Clum,  261. 
Hoare  v.  Dawes,  56. 

v.  Oriental   Bank,    97,   224. 
Hobart  v.  Ballard,  51. 

v.  Lemon,   89. 


are  to  pages. 

Hobbs    v.    Chicago    Packing    & 
Provision  Co.,  200. 

v.  McLean,  95,  177. 
Hodge  v.  Twitchell,  156. 
Hodgson,  In  re,  287. 
Hodgson  v.  Baldwin,  54. 
Hoeflinger  v.  Wells,  196. 
Hoffer's  Appeal,  229. 
Hoffman  v.  Porter,  125. 
Hogan  v.  Hadzsits,  299. 

v.  Reynolds,  217. 
Hogendobler  v.   Lyon,   274. 
Hoile  v.  York,  51. 
Holbrook    v.    Lackey,    129,    130, 
284. 

v.  Oberne,  29,  39. 

v.  St.  Paul  F.  &  M.  Inii.  Co., 
107. 
Holden  v.  French,  29,  44. 

v.  McMakin,  110. 
Holderness  v.  Shackels,  178. 
Holifield  v.  White,  32,  41,  44. 
Holladay  v.  Elliott,  272. 
Holland  v.  Long,  67,  105. 
Holliday  v.  Union  &  Pager  Bag 

Co.,  296. 
Hollister  v.  Simonson,  271. 
Holme  v.  Hammond,  19,  20,  184. 
Holmes  v.  DeCamp,  284. 

v.  Hawes,  226. 

v.  Jarrett,  124,  125. 

v.  McDowell,  228. 

v.  McGray,  94. 

v.  Old  Colony  R.  Co.,  30,  32. 
Holt  v.  Simmons,  263. 
Holton  v.  Holton,  227. 
Home  v.  Hammond,  17. 
Home    Library    Ass'n   v.    White- 
row,  249. 
Homer  v.  Wood,  245,  246. 
Homfray  v.  Fothergill,  135. 
Hooper  v.  Keay,  218. 
Hopkins  v.  Banks,  276. 

v.  Forsyth,    57. 


318 


TABLE  OF  CASES. 


References 

Horbach's  Adm'rs.  v.  Eider,  162. 
Horn  v.  Newton  City  Bank,  199. 
Horton's  Appeal,  8,  269. 
Hoskinson  v.  Eliot,  78,  180,  181, 

183,  184,   191,  284. 
Hotchin  v.  Kent,  184. 
Hotopp  v.  Huber,  296. 
Houseal's  Appeal,  230. 
Howe  v.  Lawrence,  226,  23G. 

v.  Savory,  242. 

v.  Shaw,  207. 
Howell  v.  Adams,  197,  214,  215, 
216. 

v.  Brodie,  52. 

v.Harvey,  265,  267,  271. 
Howes  v.  Fisk,  73. 
Howland  v.  Davis,  181. 
Hoyt  v.  Hasse,  210. 

v.  Sprague,  177,  258. 
Hubbard  v.  Curtis,  138. 

v.  Guild,  175. 

v.  Matthews,  51,  53,  274. 

v.  Moore,  273. 

v.  Morgan,  296. 
Hubbardston  Lumber  Co.  v.  Cov- 
ert, 101,  128. 
Hudson  v.  McKenzie,  188. 
Huggins  v.  Huggins,  22. 
Hughes  v.  Ewing,  168. 

v.  Gross,  210. 
Huiskamp  v.  Moline  Wagon  Co., 

224. 
Hulett  v.  Fairbanks,  47,  93,  94. 
Hultzer  v.  Phillips,  236. 
Humphreys  v.   McKissock,  39 

v.  Mooney,  62. 
Hundley  v.  Farris,  234. 
Hunnewell     v.    Willow     Springs 

Canning  Co.,  291. 
Hunt  v.  McCabe,  30. 

v.  Semonin,  105. 
Hunter  v.  Conrad,  31. 

v.  Hunter,  219. 

v.  Pfeiffer,  96. 


are  to  pages. 

Hunter  v.  Whitehead,  87,  94. 
Huntington  v.  Potter,  274,  275. 
Huntington-White    Lime    Co.    v. 

Mock,  276. 
Huntley  v.   Huntley,   85,  86. 
Hurlbut  v.  Johnson,  137. 
Hurley  v.  Walton,  93,  94. 
Hutchinson   v.   Dubois,  128,  131, 
136,   138,   139. 
v.  Smith,  283. 
Hutton  v.  Eyre,  219. 
v.  Murphy,  249. 
v.  Thompson,  60. 
Hyde  v.  Casey-Grimshaw  Marble 
Co.,  206,  207. 
v.  Moxie      Nerve-Food      Co., 
242. 
Hyrne  v.  Erwin,  201,  249. 


Iddings  v.  Pierson,  104. 
Ihmsen  v.  Lathrop,  67. 
Iliff  v.  Brazill,  56. 
Illingworth  v.  Parker,  38. 
Illinnois  Cent.  R.  Co.  v.  Owens, 

243. 
Ingals  v.  Ferguson,  4,  5. 
Ingraham  v.  Foster,  52. 
Insurance  Co.  v.  Railroad  Co.,  45. 
Irvin  v.  Conklin,  71. 

v.Nashville,  C.   &   St.  L.  R. 
Co.,  45,  46. 
Irwin  v.  Bidwell,  32,  52. 

v.  Williar,  183,  184,  188. 
Island  Sav.  Bank  v.  Galvin,  288. 
Isler  v.  Baker,  271. 
Ives  v.  Miller,  251,  252. 


Jacaud  v.  French,  97,  245. 
Jack  v.  McLanahan,  277,  279. 


TABLE  OF  CASES. 


310 


References 

Jackson,  Ex  parte,  211. 

v.  Bohrman,   243. 

v.  Cornell,  227. 

v.  Crapp,  117. 

v.  Deese,  271. 

v.  Jackson,  123. 

v.  Johnson,  167. 

v.  Lahee,  228. 

v.  McLean's  Ex'rs,  95. 

v.  Pixley,  74. 
Jackson  Bank  v.  Durfey,  225. 
Jacomb  v.  Harwood,  220. 
Jacquin  v.  Buisson,  280,  294,  298. 
Jaffe  v.  Krum,  297. 
Jaffrey  v.  Jennings,  208. 
James,  In  re,  167. 

v.  Burnett,    137. 
James    T.    Hair    Co.   v.    Thorne, 

243. 
Janney  v.  Springer,  178,  188. 
Jeffereys  v.   Small,  130. 
Jeness  v.  Carlton,  261. 
Jennings  v.  Baddeley,  272. 

v.  Rickard,   158. 
Jernee  v.   Simonson,   19,   21,   31, 

48. 
Jessup  v.  Carnegie,  63. 
Jewett,  In  re,  67. 

v.  Brooks,  255. 
Johnson's  Appeal,  155. 
Johnson  v.  Alexander,  18. 

v.  Berlizheimer,  284. 

v.  Bernheim,  194. 

v.  Carter,  29,  36,  38,  84,  102. 

v.  Connecticut  Bank,   137. 

v.  Crichton,  247. 

v.  Hartshorne,    165,    166. 

v.  Miller,  32. 

v.  Peck,  245. 

v.  Smith,  240. 
John  Spry  Lumber  Co.  v.  Chap- 
pell,  230. 
Johnston  v.  Dutton's  Adm'r,  172. 
194. 


are  to  pages. 

Johnston  v.  Eichelberger,  51. 

v.  Robuck,  224. 
Jones'  Appeal,  132. 
Jones  v.  Blun,  97,  100. 

v.  Butler,  117. 

v.Clark,  10,  290. 

v.  Davies,  24,  27,  56,  84,  86, 
93,    125,    146,    210. 

v.  Davis,   211. 

v.  Dexter,  129. 

v.  Fegely,  80. 

v.  Howard,  45. 

v.  Jones,  264. 

v.Lloyd,  271. 

v.  McMichael,  41,  43,  47,  85. 

v.  Maund,  218. 

v.  Murphy,   38. 

v.  Neale,   125. 

v.  Noy,  271. 

v.  O'Farrel,  8,  9. 

v.  Parker,  91. 

v.  Scott,  8. 

v.  Walker,  30,  31,  282. 

v.Yates,  245,  246. 
Jordan,  In  re,  207. 

v.  Miller,  192. 
Judd  Oil  Co.  v.  Hubbell,  208. 
Judge  v.  Braswell,  10,  190. 
Jurgens  v.  Ittman,  271. 

K. 

Kahn  v.  Smelting  Co.,  10. 

v.  Thomson,  107. 
Kaiser  v.  Lawrence  Sav.  Bank, 

63. 
Karrick  v.  Hannaman,  267. 
Katz  v.  Brewington,  151. 
Keay  v.  Fenwick,  222. 
Keiley  v.  Turner,  164,  165,  168. 
Reiser  v.  State,  32. 
Kell  v.  Nainby,  242. 
Keiley  v.  Bourne,  124. 
v.  Hurlburt,  215. 


320 


TABLE  OF  CASES. 


References 

Kelley  v.  Shay,  134,  165. 
Kellogg  v.  Griswold,  15. 
Kellogg  Newspaper  Co.,  A.  N.  v. 

Farrell,  21. 
Kelly  v.  Devlin,  95. 

v.  Scott,  231. 
Kelly  Co.,  O.  S.  v.  Zarecor,  141. 
Kemptner,  In  re,  226. 
Kendal,  Ex  parte,  233. 
Kendal  v.  Wood,  185. 
Kendall,  Ex  parte,  239. 
Kendall    v.    Hamilton,    206,    221, 

287. 
Kennedy  v.  Budd,  108,  109. 

v.  Kennedy,  174. 

v.  McFadon,   162. 
Kenneweg    v.    Schilansky,    128. 

131. 
Kerr  v,  Potter,  22,  23,  25,  29. 
Kershaw  v.  Kelsey,  87. 
Ketchem  v.  Durkee,  177. 
Ketchum  v.  Clark,  263. 

v.  Durkee,   226,   231. 
Kilgore  v.  Bruce,  247. 
Kimball  v.  Lincoln,  163. 
Kimberley  v.  Arms,  10,  11,  154. 
Kimmins  v.  Wilson,  92. 
King,  Ex  parte,  239. 
King's  Appeal,  228. 
King  v.  Chuck,  151. 

v.  Hamilton,    163. 

v.  Hoare,  221. 

v.  Sarria,  294. 
Kingman  v.  Spurr,  6,  8,  52,  291. 
Kingsbury  v.  Tharp,  48. 
Kingsland    v.   Braistead,   291. 
Kinloch  v.  Hamlin,  267. 
Kinney  v.  Robison,  254. 
Kinsman  v.  Castleman,  105. 

v.  Parkhurst,   155. 
Kirby  v.  Carpenter,  229,  234. 

v.  Carr,  271. 

v.Hewitt,  104. 
Kirk  v.  Blurton,  107. 


are  to  pages. 

Kirk  v.  Garrett,  202. 

v.  Hartman,  66,  71. 

v.  Hodgson,  173. 
Kirkman  v.  Kirkman,  112. 
Kirkwood  v.  Cheetham,  66. 
Kirwan  v.  Kirwan,  220. 
Kitner  v.  Whitlock,  102,  104. 
Kline  v.  Swift  Specific  Co.,  241. 
Knipe  v.  Livingston,  169,  170. 
Knowlton  v.  Reed,  44,  256. 
Knox  v.  Buffington,  193. 

v.  Gye,  129,  131,  135. 
Kramer  v.  Arthurs,  128. 
Krans  v.  Luthy,  73. 
Kringle  v.  Rohmberg,  125. 
Kritzer  v.  Sweet,  67,  71. 
Kruschke    v.    Stefan,    121,    128, 

132. 
Kucaid  v.  National  Wall  Paper 

Co.,  224. 
Kuhn  v.  Newman,  35,  47. 
Kutz  v.  Dreibelbis,  252. 

v.  Naugle,  275. 


Lacey  v.  Hill,  181,  219,  236,  23S.. 
Lachaise  v.  Marks,  295,  296. 
Lacy  v.  Wolcott,  276. 
Ladd  v.  Griswold,  178,  225. 
Laffan  v.  Naglee,  155. 
LaFlex  v.  Burss,  30. 
Lafond  v.  Deems,  54,  291. 
Lake  v.  Duke  of  Argyll,  70. 

v.  Gibson,  130. 

v.  Munford,  291. 
Lamb  v.  Wilson,  163,  279. 
La  Mont  v.  Fullam,  32. 
Lampert  v.  Ravid,  254,  255. 
Lamwersick  v.  Boehmer,  104. 
Lancaster  Bank  v.  Myley,  235. 
Lancaster  Co.  Nat.  Bank  v.  Bof- 

fenmyer,  66. 
Lane  v.  Arnold,  109. 


TABLE  OF  CASES. 


321 


References  are  to  pages. 


Lane  v.  Bishop,  90. 

v.  Jones,  176. 

v.  Thomas,  95. 

v.Williams,  190. 
Lange  v.   Kennedy,   274. 
Langmead's   Estate,   In   re,   177, 

178. 
Lanier  v.  McCabe,  189. 
Lansing  v.  Gaine,  276. 
Lapenta  v.  Lettieri,  273,  274. 
Lathrop  v.  Adams,  200,  201. 
Latta  v.   Kilbourn,   50,  154,   156, 

157,  158,  172. 
Lanferty  v.  Wheeler,  107. 
Lauffer  v.  Cavett,  12/. 
Lawrence  v.  Clark,  162,  252. 

v.  Hull,  108. 

v.  Robinson,  11,  165. 

v.  Taylor,  191. 
Laws  v.  Rand,  187. 
Lay  v.  Emery,  152. 
Laylin  v.  Knox,  221. 
Leach  v.  Leach,  155. 

v.  Milburn  Wagon  Co.,  241. 
Leadbitter  v.  Farrow,  249. 
Leaf's  Appeal,  145. 
Leavitt  v.  Peck,  184,  193,  194. 
Lee  v.  First  Nat.  Bank,  7S,  189, 
190. 

v.  Lashbrooke,  136. 
Lee's    Ex'x.    v.    Dolan's    Adm'x, 

160. 
Lefevre's    Appeal,    86,    119,    121, 

226,  231,  232. 
Le  Fevre  v.  Castagnio,  26,  27,  29. 
Leggett  v.  Hyde,  13,  14,  17,  18, 

22,  30,  31,  40. 
Leinkauff  v.  Munter,  208. 
Lengle  v.  Smith,  37,  38. 
Lenow  v.  Fones,  145. 
Leonard  v.  Sparks,  35. 
LePage  v.  McCrea,  217,  219,  248. 
LeRoy  v.  Johnson,  197. 
Leslie  v.  Wiley,  250. 


Lester  v.  Givens,  137-140. 
Leverson  v.  Lane,  185. 
Levy  v.  Cadet,  277. 

v.  Pyne,  189. 

v.  Williams,  225. 
Lewis  v.  Cline,  240. 

v.  Greider,  242. 

v.  Moffett,    163,    164. 

v.  Reilly,  189. 
•    v.  Tilton,  291. 
Liberty  Sav.  Bank  v.  Campbell, 

247. 
Ligare  v.  Peacock,  136,  163,  166, 
167,  264. 

v.  Vanderburg,  265. 
Lindner  v.  Adams  County  Bank, 

282. 
Lindsay  v.  Race,  119. 
Lineweaver  v.  Slagle   296,  29S. 
Lingen  v.  Simpson,  178. 
Lingenfelser  v.  Simon,  222. 
Lintner   v.    Millikin,    21,    24,    31, 

48. 
Linton  v.  Hurley,  207. 
Little  v.  Caldwell,  281,  286. 
Liverpool,  B.  &  R.  P.  Nav.  Co.  v. 

Agar,  97. 
Livingston  v.  Lynch,  25,  173. 

v.  Roosevelt,  185,  189. 
Lloyd,  In  re,  237. 
Lloyd  v.  Archbowle,  242. 

v.  Carrier,  168. 

v.  Loaring,   54. 

v.  Thomas,  279. 

v.  Tracy,  138. 
Locke  v.  Lewis,  196. 

v.  Stearns,  201. 
Lockwood  v.  Beckwith,  152,  157. 

v.  Doane,    37,   38,   47. 

v.  Roberts,  166. 
Lodd  v.  Griswold,  236. 
Lodge,  Ex  parte,  238. 

v.  Dicas,  220. 

v.  Prichard,  235. 


322 


TABLE  OF  CASES. 


References  are  to  pages. 


Loeb  v.  Morton,  108. 

v.  Pierpoint,  192. 

v.  Stern,  182. 
Loeschigk  v.  Hatfield,  283. 
Logan  v.  Mason,  218. 
Lomme  v.  Kintzing,  14. 
London   Assur.   Co.   v.   Drennan, 

23. 
Long  v.  Majestre,  157. 

v.  Slade,  235. 
Loomis  v.  Armstrong,  280,  285. 

v.  Barker,   208. 

v.  Marshall,  29,  31. 
Loorya  v.  Kupperman,  265. 
Lord  v.  Baldwin,  237. 

v.  Devendorf,  234. 

v.  Proctor,  13,  18. 
Lord     Southampton     v.     Brown, 

198. 
Louisville  Trust  Co.  v.  Columbia 

Finance  &  Trust  Co.,  121. 
Louisville  &  N.  R.   Co.  v.  Alex- 
ander, 90. 
Love  v.  Payne,  7,  8,  9. 
Lovejoy  v.  Spafford,  217. 
Lowrey  v.  Brooks,  44. 
Lowman  v.  Sheets,  186. 
Lucas  v.  Laws,  139. 
Ludlow's  Heirs,  v.  Cooper's  De- 
visees, 131,  134,  143,  145,  146. 
Lunt  v.  Lunt,  109. 
Lusk  v.  Smith,  276. 
Lyman  v.  Lyman,  76,  133. 
Lyon  v.  Johnson,  214. 

v.  Knowles,    44. 

v.  Snyder,    163. 
Lyons  v.  Lyons,  160. 

v.  Murray,  159. 
Lyth  v.  Ault,  220,  221. 

M. 

Mabett  v.  White,  194. 
McAdams'  Ex'rs  v.  Hawes,  87. 


McAllister  v.  Payne,  164. 
McArthur  v.  Bloom,  89. 

v.  Ladd,  30. 
McBride  v.  Ricketts,  39. 
McCabe  v.  Sinclair,  85. 
McCall  v.  Moschcowitz,  111. 

v.  Moss,  8,  151,  269. 
McCartney  v.  Hubbell,  284. 
McCaughan  v.  Brown,  281,  283. 
McConnell  v.  Denver,  10. 
McCoon  v.  Galbraith,  279. 
McCormack's  Appeal,  132. 
McCowin  v.  Cubbison,  276,  279. 
McCoy  v.  Brennan,  244. 
McCulloh    v.    Dashiell's    Adm'r, 

237. 
McDonald  v.  Fairbanks,  1SS. 

v.  Matney,  25,  49. 
McDonnell  v.  Battle  House  Co., 
32. 

v.  Ford,  242,  243. 
McDowell  v.  North,  252. 
McDuffie  v.  Bartlett,  49. 
McElvey  v.  Lewis,  265. 
McFadden  v.  Leeka,  160. 
McGehee  v.   Powell,  298. 
McGlensey  v.  Cox,  8,  9. 
McGorray  v.  O'Connor,  280. 
McGowan  Bros.  Pump  &  Mach. 

Co.  v.   McGowan,  112. 
McGrath  v.  Cowen,  194,  282. 

v.  Home  Ins.  Co.,  187. 
McGreary  v.  Chandler,  291. 
McGregorv.  Cleveland,  102,  105. 
McGrew  v.  City  Produce  Exch., 
61. 

v.  Walker,  49. 
McGunn  v.  Hanlin,  94,  96. 
Mcintosh  v.  Zaring,  281. 
Mclntyre  v.  Miller,  217. 
Mackay  v.  Bloodgood,  191. 
McKelvy's  Appeal,  262. 
McKewan's  Case,  161. 
Mackey  v.  Bloodgood,  199. 


TABLE  OF  CASES. 


323 


References  are  to  pages. 


Macklin's  Ex'r  v.  Crutcher,  105, 

106,  108. 
McKnight  v.  Ratcliff,  297. 
McLain  v.  Carson,  288. 
McLaughlin  v.  Bieber,  221. 
McLeod  v.   Miner,  52. 
McLinden  v.  Wentworthh,  104. 
McMahon     v.     McClernan,     157, 

265. 
McMillan  v.  Hadley,  126. 
McNair  v.  Rewey.  197. 
McNeely  v.  Haynes,  200. 
McNeil   v.   First  Congregational 

Soc,  126. 
McNutt  v.  King,  261. 
McPherson  v.  Bristol,  188. 

v.  Rathbone,    276. 
McPhillips  v.  Fitzgerald,  36. 
McStea  v.  Matthews,  51. 
Macy  v.  DeWolf,  57. 
Maddick  v.  Marshall,  68,  69. 
Maddock  v.  Astbury,  145. 
Madison  County  Bank  v.  Gould, 

295. 
Mafflyn  v.  Hathaway,  225. 
Magovern  v.  Robertson,  40,  47. 
Mair  v.  Glennie,  41. 
Major  v.  Hawkes,  187,  274. 

v.Todd,  163. 
Malley  v.  Atlantic  F.  &  M.  Ins. 

Co.,  113. 
Mallory    v.    Hanaur    Oil-Works, 

91. 
Maloney  v.  Bruce,  298. 
Maltz  v.  American  Exp.  Co.,  292. 
Mangels  v.  Shaen,  253. 
Manhattan    Brass    Co.    v.    Allin, 

297. 
Manhattan  Brass  &  Mfg.  Co.  v. 

Sears,  14,  22,  35,  38,  101. 
Manhattan     Co.     v.     Laimbeer, 
293,  295,  298. 
v.Phillips,  295,  296. 
Mann  v.  Butler,  148,  150,  291. 


Mann  v.  Taylor,  44. 
Manning  v.  Gasharie,  291. 

v.  Williams,  288. 
Manufacturers'      &      Mechanics' 

Bank  v.  Winship,  107. 
Mara  v.  Browne,  204. 
Markle  v.  Wilbur,  173. 
Marks  v.  Hastings,  202. 
Marlett  v.  Jackman,  69. 
Marquand  v.  New  York  Mfg.  Co., 

5,  116,  262,  269. 
Marsh's  Appeal,  164,  170. 
Marsh  v.  Davis,  84,  86,  87. 

v.  Joseph,  200,  201. 
Marshall  v.  Johnson,  157. 

v.  Lambeth,  299. 
Martin  v.  Baird,  52. 

v.  Crump,  129,  130. 

v.  Fewell,   63. 

v.  Morris,  143. 

v.  Stubbings,   251. 
Martyn  v.  Gray,  69. 
Marvin  v.  Wilber,  206. 
Mason  v.  Connell,  7,  8,  9,  267. 

v.  Denison,   248. 

v.  Eldred,  206. 

v.  Hackett,  30. 

v.  Partridge,  194. 

v.  Potter,  41. 

v.  Tiffany,  281,  287. 
Masters  v.  Lauder,  297. 
Matherson  v.  Wilkinson,  281. 
Matlock  v.  Matlock,  143. 
Matteson  v.  Nathanson,  212,  284. 
Matthews  v.  Adams,  117,  160. 
168. 

v.  McStea,  263. 
Matthies  v.  Herth,  198. 
Mattingly  v.  Stone's  Adm'r,  164. 
Mattison  v.   Farnham,  261. 
Mattlack  v.  James,  126. 
Mauck  v.  Mauck,  132,  146. 
Maude,  Ex  parte,  239. 
Maugham  v.  Sharpe,  107,  125. 


324 


TABLE  OF  CASES. 


References  are  to  pages. 


Mauney  v.  Colt,  30,  278. 

.Maxwell   v.  Gibbs,  74,  215. 

May    v.    International    Loan    & 

Trust  Co.,  33,  48. 
Mayer  v.  Clark,  225. 

v.  Soyster,  90. 
.Mayiield  v.  Turner,  29. 
Mayhew's  Case,  8. 
.Mayou,  Ex  parte,  220. 
May  rant  v.  Marston,  39. 
Mead   v.   Shepard,   188. 
v.  Tomlinson,  243. 
Meador  v.  Hughes,  91. 
Meadows  v.  Moquot,  161. 
Meagher  v.  Reed,  50. 
Meaher  v.  Cox,  7,  8,  9. 
Meason  v.   Kaine,  121,  252,  258. 
Mechanics'  &  Farmers'  Bank  v. 

Dakin,  108. 
Medbury  v.  Watson,  244. 
Medill  v.  Collier,  63. 
Meech  v.  Allen,  228,  234. 
Meehan  v.   Valentine,   3,   20,   27, 

31,  37,  47,  100. 
Mehlhop  v.  Rae,  88. 
Meily  v.  Wood,  100. 
Mellersh  v,  Keen,  110. 
Mellors  v.  Shaw,  200. 
Menage  v.  Burke,  124. 
Menagh   v.    Whitwell,    131,    176, 

225. 
Mendenhall,  In  re,  61. 
Mendenhall  v.  Benbow,  177. 
Menendez  v,  Holt,  110. 
Menkins  v.  Lightner,  89. 
Merchants'  Nat.  Bank  v.  Stand- 
ard Wagon  Co,  19. 
v.  Wehrmann,   91. 
Merchants'      &      Manufacturers' 

Band  v.  Stone,  62. 
MeridanNat.  Bank  v.  Gallaudet, 

49,  102. 
Merrall  v.  Dobbins,  13,  18. 
Merrick  v.  Brainard,  8. 


Merrick  v.  Cordon,  41,  45. 
Merrill,  In  re,  298. 

v.  Blanchard,   213. 
Merriman  v.  Magiveny,  62. 
Merritt  v.  Day,  277. 

v.  Dickey,  129,  280. 

v.  Walsh,  58. 
Mersereau  v.  Norton,  128. 
Mershon  v.  Hobensack,  70. 
Meserve  v.  Andrews,  160. 
Messer  v.  Messer,  125. 
Metcalf  v.  Redmon,  4,  6,  51. 
Metcalfe  v.  Bradshaw,  151,  158. 
Metropolitan  Nat.  Bank  v.  Sirret, 

295,  296. 
Meyer  v.  Krohn,  12,  91,  216. 

v.  Michaels,  198. 

v.  Sharpe,  46. 
Meyers  v.  Merillion,  163. 
Meyran  v.  Abel,  279. 
Michael  v.  Workman,  103. 
Mickle  v.  Peet,  252. 
Mifflin  v.  Smith,  106,  151,  264. 
Miles  v.  Ogden,  218. 
Millar  v.  Craig,  167. 
Miller  v.  Florer,  275. 

v.  Freeman,   255. 

v.  Hoffman,  281. 

v.  Hughes,  14,  30,  47. 

v.  Jones,  280. 

v.  Lord,  168. 

v.  O'Boyle,  155. 

v.  Royal  Flint  Glass  Works, 
180. 
Milliken  v.  Loring,  275. 
Milner  v.  Cooper,  283. 
Miner  v.  Downer,  106,  198. 

v.  Lorman,  254. 
Minnit  v.  Whinery,  212. 
Minror  v.  Gaw,  247. 
Mitchell  v.  Dall,  242. 
Mitchell  v.  O'Neale,  92. 

v.  Ostrom,  276. 

v.  Railton,  240. 


TABLE  OF  CASES. 


325 


References  are  to  pages. 


v.  Reed,  155. 

v.  Tarbutt,    249. 

v.Wells,  251,  255. 
Moderwell  v.  Mullison,  143. 
Moffat  v.  McKisick,   105. 
Moies  v.  O'Neill,  271. 
Moist's  Adm'rs'  Appeal,  282. 
Moley  v.  Brine,  136. 
Molineaux  v.  Raynolds,  133.  134. 
Moline  Water  Power  &  Mfg  Co. 

v.  Webster,  234. 
Mollwo   v.   Court   of  Wards,   17, 

21,  22,  37,  40,  54,  66. 
Monroe  v.  Connor,  194,  212,  267. 

v.  Ezzel,  242. 

v.  Greenhoe,  35. 
Montague  v.  Hayes,  166. 
Montgomery  v.  Forbes,  63. 
Moore,  Ex  parte,  239. 
Moore  v.  Bare,  136. 

v.  Duckett,  213. 

v.  Knight,   204. 

v.  Pennell,   138,  139. 

v.  Price,  272. 

v.  Williams,   36. 
Moran  v.  Palmer,  143. 
More  v.  Rand,  254. 
Moreau  v.  Saffarans,  124. 
Moreton  v.  Hardern,  201. 
Morgan  v.  Farrel,  48. 

v.  Stearns,  36. 

v.  Tarbell,  218. 
Morlitzer  v.  Bernard,  199. 
Morrill  v.  Bissell,  214. 

v.  Colebour,    146. 

v.  Spurr,  52. 
Morris  v.  Barrett,  118,  123. 

v.  Peckham,  85,  86,   259. 

v.  Wood,  170. 
Morris  Run  Coal  Co.  v.  Barclay 

Coal  Co.,  90,  95,  96. 
Morrison  v.  Blodgett,  138,  140. 

v.Cole,  30. 

v.  Smith,  170. 


Morrow  v.  Murphy,  30. 

Morse   v.   Richmond,   35,   36,   47, 

106,  184,  197. 
Morss  v.  Gleason,  268. 
Mortley  v.  Flanagan,  226. 
Mosier  v.  Parry,  60. 
Moss  v.  Jerome,  45. 

v.  Livingston.  250. 
Mudd  v.  Bates,  256. 
Mulhall  v.  Cheatham,  22,  24,  47. 
Mumford  v.  McKay,  269. 

v.  Nicholl,   47,   58. 
Munson  v.  Sears,  39. 
Munton   v.    Rutherford,    69. 
Murphy  v.  Crafts,  170. 

v.Warren,    115,   122,   177. 
Murray  v.  Bogert,  7. 

v.  Mumford,    274,    281. 
Murrell  v.  Murrell,  76. 
Murrill  v.  Neill,  234,  235. 
Musier  v.  Trumpbour,  43. 
Mycock  v.  Beatson,  271. 
Myers  v.  Edison  Gen.  Elec.  Co., 
296. 

v.  Tyson  ,226. 

v.Winn,  252. 
Myndersee  v.  Snook,  244. 
Myrickv.  Dame,  245. 

X. 

Nanson  v.  Gordon,  238. 
Napier  v.  Catron,  192. 

v.  McLeod,  278. 
National  Bank  v.  Ingraham,  105, 
108. 
v.  Norton,  276. 
v.  Thomas,    197,    199. 
National  Bank   of  Commerce  v. 

Meader,  199. 
National  Shoe  &  Leather  Bank 

v.  Herz,  216. 
National    Surety    Co.    v.    T.    B. 


32(3 


TABLE  OF  CASES. 


References  are  to  pages. 


Townsend    Brick    &    Contract- 
ins  Co.,  28,  29,  36. 
X;iiional  Union  Bank  v.  Landon, 

63,  64. 
Natusch  v.  Irving,  173. 
Neal's  Ex'rs.  v.  Gilmore,  284. 
Neale  v.   Tnrton,   190. 
Needham  v.  Wright,  274. 
Nehrboss  v.  Bliss,  284. 
Neiman  v.  Neiman,  193. 
Nelson  v.  Hayner,  156,  261. 

v.Hill,  287. 
Newberger  v.  Friede,  36. 
Newbiggin  v.  Pillans,  89. 
Newbigging  v.  Adam,  160,  271. 
Newby  v.  Harrell,  251. 
Newell  v.  Cochran,  156. 

v.  Townsend,  129. 
Newhall   v.   Buckingham,   138. 
Newland  v.  Tote,  12. 
Newman  v.  Bagley,  227. 

v.  Bean,  30,  31. 
Newmarch   v.    Clay,   218. 
Newsom  v.  Pitman,  255. 
Newsome  v.  Coles,  68. 
New   York    &    S.    Canal    Co.    v. 

Fuller  Bank,  90. 
New    York    Commercial    Co.    v. 

Francis,  235. 
New    York     Dry     Dock     Co.     v. 

Treadwell,  248. 
New  York  Life  Ins.  Co.  v.  Stat- 

ham,  87. 
Nichol  v.  Stewart,  115,  128. 
Nichols  v.  White,  106. 
Nicholson  v.  Moog,  67. 

v.  Ricketts,  184. 
Nicoll  v.  Mumford,  128,  131. 

v.  Ogden,  146. 

v.  Town  of  Huntington,  163. 
Niehoff  v.  Dudley,  21,  29,  31. 
Nims  v.  Nims,  117. 
Nirdlinger  v.   Bernheimer,   12. 
Nisbet  v.  Nash,  10. 


Niven  v.  Spickerman,  291. 
Nix  v.  First  Nat.  Bank,  210. 
Nixon  v.  Nash,  137,  138,  139. 
Nolan  v.  Lovelock,  10,  194. 
Noonan,  In  re,  222. 
Noonan  v.  Nunan,  131. 
Nordlinger  v.  Anderson,  225. 
Norman     v.    Jackson     Fertilizer 

Co.,  221. 
North  v.  Mudge,  192. 
North  Pac.  Lumber  Co.  v.  Spore, 

91. 
North    Pennsylvania    Coal    Co.'s 

Appeal,  198. 
Northrup  v.  McGill,  136. 
v.Phillips,  95,  158. 
Norton  v.  Seymour,  105. 
Norway  v.  Rowe,  258. 
Noyes    v.    New    Haven,    etc.    R. 

Co.,  194. 
Nussbaumer  v.  Becker,  214,  215. 
Nutting  v.  Ashcroft,  113. 


<). 


Oak  Ridge  Coal  Co.   v.  Rogers, 

292. 
O'Brien  v.  Hanley,  163. 
Ogden  v.  Astor,  286. 
Oliphant  v.  Mathews,  108. 
Oliver  v.  Forrester,  261,  281,  286. 
v.  Gray,  25,  46. 
v.  Olmstead,  282. 
Olmstead  v.  Webster,  222. 
O'Neil  v.  Salmon,  227. 
Ontario  Bank  v.  Hennessey,  102, 

105. 
Oppenheimer  v.  demons,  27,  38, 

39,  41,  46,  66,  80,  107. 
Orr  v.  Cooledge,  89. 
Orvis  v.  Curtiss,  40. 
Osbrey  v.  Reimer,  35. 
Osburn  v.  Farr,  88,  242. 
Osgood  v.  Glover,  187. 


TABLE  OF  CASES. 


327 


References  are  to  pages. 


O.  S.  Kelly  Co.  v.  Zarecor,  141. 
Oteri  v.  Scalzo,  271. 
Overholt's  Appeal,  235. 
Owen,  Ex  parte,  122. 
Ozborn  v.  Woolworth,  201. 

P. 

Page  v.  Brant,  206,  240,  248. 

v.  Citizens'  Banking  Co.,  202. 

v.Thomas,  119,  126,   127. 

v.  Thompson,  251,  253. 
Pahlman  v.  Graves,  236. 

v.  Taylor,  190. 
Paige  v.  Paige,  125,  143. 
Paine  v.  Thacher,  163,  255. 
Painter  v.  Painter,  285. 
Painter's  Ex'rs  v.  Painter,  282. 
Palliser  v.  Erhardt,  27,  31,  189. 
Palmer  v.  Dodge,  278. 

v.  Maxwell,  284. 

v.  Purdy,  221. 

v.  Sawyer,  274. 

v.  Scott,  78,  1S9,   190,  203. 

v.  Stephens,     104,    106,    107, 
108. 

v.  Tyler,  51. 
Parchen  v.  Anderson,  37,  71. 
Parker  v.  Bethel  Hotel  Co.,  59. 

v.  Canfield,  14,  15,  16,  28,  29, 
31,  32,  37,  214. 

v.  Cousins,  278. 

v.  Fergus,  29,  32,  42,  44. 

v.  Merritt,  178. 

v.  Pistor,  138. 
Parmalee  v.  Wiggenhorn,  211. 
Patch  v.  Wheatland,  105. 
Patterson  v.  Blake,  134. 

v.  Brewster,  94. 

v.  Seaton,  225. 

v.  Silliman,  175. 

v.  Ware,  257. 
Patterson's  Appeal,  96. 
Pattison  v.  Blanchard,  39,  41. 


Patton  v.  Leftwich,  283. 
Paul  v.  Cullum,  25,  135. 
Pawsey  v.  Armstrong,  110. 
Payne  v.  Freer,  165. 
v.  Hornby,  177. 
v.  James,  208. 
v.  Matthews,  229,  234,  239. 
v.  Thompson,  90. 
Peacock  v.  Cummings,  172. 

v.  Peacock,     117,     136,     151, 
265,  274. 
Pearce  v.  Ham,  266. 
v.  Pearce,  122. 
v.  Wilkins,  194,  219. 
Pearpoint   v.   Graham,    267. 
Pearson  v.  Keddy,  176,  288. 
Pease  v.  Hewitt,  272. 

v.  Hirst,  244. 
Pechell  v.  Watson,  244. 
Peckham    Iron    Co.    v.    Harper, 

200. 
Peele,  Ex  parte,  243. 
Pelletier  v.  Couture,  88. 
Pendleton  v.  Cline,  109. 

v.  Phelps,  284. 
Penn  v.  Fogler,  210. 

v.  Stone,  254. 
Pennock  v.  Swayne,  253. 
Pennypacker  v.  Leary,  94. 
Pentz  v.  Stanton,  249. 
People      v.      Croton      Aqueduct 
Board,  104. 
v.  North  River  Sugar  Refin- 
ing Co.,  90. 
Peoria  Marine  &  Fire  Ins.  Co.  v. 

Hall,  188. 
Pepper  v.  Pepper,  125,  131,  143. 
Percifull  v.  Piatt,  124. 
Perkins  v.  Fisher,  222. 
Perrin  v.  Keene,  278. 
Perrine  v.  Hankinson,  32. 
Perring  v.  Home,  52. 
Perry  v.  Randolph,  249. 
Person  v.  Wilson,  12S. 


328 


TABLE  OF  CASES. 


References  are  to  pages. 


Personette  v.  Pryme,  87. 

Perth  Amboy   Mfg.   Co.   v.   Con- 

dit,  297. 
Peters  v.  Bain,  234. 

v.  McWilliams,  268. 
Peterson  v.  Roach,  196. 
Pettis  v.  Atkins,  291. 
Pettyjohn's  Ex'rs.  v.  Woodruff's 

Ex'rs,  236. 
Pettyt  v.  Janeson,  150. 
Pfeffer  v.  Steiner,  280. 
Phelps  v.  McNeely,  224,  226. 

v.  State,  264. 
Philipp  v.  Von  Raven,  272. 
Philips  v.  Samuel,  30. 
Phillips  v.  Blatchford,  290. 

v.Cook,  140. 

v.  Pennywit,  243. 

v.  Phillips,  4,  5. 

v.  Purington,    57. 

v.  Reeder,  155. 
Phillipsburgh    Bank    v.    Fulmer, 

74. 
Philpott  v.  Bechtel,  243. 
Pierce  v.  Bryant,  296,  298. 

v.  Covert,  143. 

v.  Daniels,  157. 

v.  McClelland,  153. 

v.  Scott,  169. 

v.  Shippee,  35,  47. 

v.  Whitney,  51. 
Pierce's  Adm'r  v.  Trigg's  Heirs, 

133,  141. 
Pierpont  v.  Lanphere,  29,  36. 
Pilcher,  Succession  of,  97. 
Pillans  v.  Harkness,  271. 
Pillsbury  v.   Pillsbury,   25,   56. 
Pinckney  v.  Wallace,  283. 
Pine  v.  Ormsbee,  265. 
Pipe  v.  Bateman,  291. 
Pirtle  v.  Penn,  257. 
Pitkin  v.  Benfer,  196,  214. 

v.Pitkin,  15,  30,  261. 


I 'hi  nters'  &  Miners'  Bank  v.  Pad- 
gett, 62. 
Piatt  v.  Halen,  243. 

v.  Piatt,  111,  152. 
Pi  inner  v.  Gregory,  203. 

v.  Lord,  90. 
Plunkett  v.  Dillon,  93. 
Podgett  v.  Ford,  29. 
Podrasnik  v.  R.  Martin  Co.,  80. 
Poillon  v.  Secor,  70. 
Polk  v.  Buchanan,  21,  30. 

v.  Oliver,  68. 
Pollard  v.  Stanton,  39,  41. 
Pomeroy  v.  Benton,  153. 
Poole  v.  Fisher,  66. 
Pooley  v.  Driver,  3,  17,  20,  22,  23, 
37,  40,  47,  100,  180. 

v.  Whitmore,     78,    181,     183, 
184,  187,  189,  190,  192. 
Pope  v.  Cole,  288. 
Porter  v.  Curtis,  29,  39. 

v.  Taylor,    187. 
Post  v.  Kimberly,  25. 

v.  Southern  R.  Co.  45. 
Pott  v.   Eyton,   71. 
Potter  v.  Tolbert,  216,  265,  276, 

278. 
Powell  v.  Maguire,  95. 
Power  v.  Kirk,  269. 
Pratt  v.  Langdon,  73. 

v.  McGuinness,   128. 
Prentice  v.  Elliott,  165,  168. 
Prentiss  v.  Foster,  250. 
Preston  v.  Colby,  227,  229. 

v.  Fitch,  128. 
Price   v.   Alexander,   14,   29,    39, 
191. 

v.  Barker,  219. 

v.  Cavins,  239. 

v.  Drew,  252. 
Priest  v.  Chouteau,  35,  123,  176. 
Priestly  v.  Fernie,  249. 
Prince  v.  Crawford,  189. 


TABLE  OF  CASES. 


329 


References 

Pringle  v.  Leverich,  66,  70,  71. 
Prouty  v.  Swift,  30. 
Pugh's  Heirs  v.  Currie,  145. 
Pullen  v.  Whitfield,  288. 
Purdy  v.  Powers,  247. 
Purple  v.  Farrington,  224. 
Pursley  v.  Ramsey,  102. 
Purviance  v.  McClintee,  13. 
Purvins  v.  Champion,  252,  254. 
Purvis  v.  Butler,  249. 
Putnam  v.  Ross,  207. 
v.  Wise,  41,  44. 


Q. 


Quackenbush  v.  Sawyer,  32,  44. 
Queen  v.  Arnaud,  59. 
Quin  v.  Myles,  108. 


Railsback  v.  Lovejoy,  125. 
Rainey  v.  Nance,  176. 
Raisbeck  v.  Oesterricher,  62. 
Ralston  v.  Moore,  285. 
Rammelsberg    v.    Mitchell,    110, 

111,  124. 
Rand  v.  Wright,  261. 
Randall  v.   Knevals,  205. 
Randel  v.  Yates,  85. 
Randle  v.  Richardson,  136. 

v.  State,  29. 
Rankin  v.  Fairley,  252. 
Ratzer  v.  Ratzer,  136. 
Raub  v.  Smith,  86. 
Rawlins  v.  Wickham,  271. 
Rawlinson  v.  Clarke,  30,  84. 
Raymond  v.  Putnam,  114,  117. 

v.Vaughn,   89,    154,   271. 
Read  v.  Bailey,  219,  238. 

v.  Smith,  95. 
Reddington   v.   Lanahan,   25,.  29. 
Redfield  v.  Gleason,  163. 


are  to  pages. 

Reed  v.  Murphy,  32. 

v.  Vidal,  258. 
Rees  v.  Duncan,  129,  130,  132. 
Reg.  v.  Robson,  54. 
Rehfuss  v.  Moore,  296. 
Reid,  Ex  parte,  237. 
Reid  v.  F.W.  Kreling's  Sons'  Co., 
68. 

v.  Hollinshead,  56,  196. 

v.  Rigby,  199. 
Reilly  v.  Reilly,  12. 
Reinheimer  v.  Hemingway,  139. 
Reiter  v.  Morton,  272. 
Remick  v.  Emig,  136,  261,  282. 
Renfrow  v.  Pearce,  153,  279. 
Renton  v.  Chaplain,  269. 
Reppert  v.  Colvin,  277. 
Reyburn  v.   Mitchell,  223. 
Reynell  v.  Lewis,  60. 
Reynolds  v.  Bowley,  237. 

v.  Cleveland,  196. 

v.  Creveling,   296. 

v.  Hicks,  12. 

v.  Pool,  44. 
Rhodes  v.  Moules,  203. 
Rianhard  v.  Hovey,  64. 
Ricart  v.  Townsend,  284. 
Rice  v.  Barnard,  76,  232. 

v.Barrett,  71. 

v.  Culver,  254. 

v.  Merchants'     &     Planters' 
Nat.  Bank,  280. 

v.Woods,   219. 
Richard  v.  Allen,  138. 

v.  Mouton,  275. 
Richards  v.  Grinnell,  38,  39,  47, 
86,  94,  117. 

v.  Heather,  284. 

v.Hunt,   212. 

v.  Todd,  271. 
Richardson  v.  Bank  of  England, 
98,  99. 

v.  Carlton,  297. 

v.  Farmer,  248. 


330 


TABLE  OF  CASES. 


References  are  to  pages. 


Richardson  v.  Gregory,  264. 

v.  Hogg,  296,  298. 

v.  Hughitt,  30,  31. 

v.  Lester,  191. 

v.  Moies,  275. 
Riches,  In  re,  185,  189. 
Richmond  v.  Heapy,  245. 

v.  Judy,  54. 

v.  Voorhees,  122. 
Ricketts  v.  Bennett,  189. 
Riddle  v.  Etting,  275. 

v.  Whitehill,  124,  125,  143. 
Ridenour  v.  Mayo,  64. 
Rider  v.  Hammell,  48. 
Rieser,  In  re,  233. 
Rimel  v.  Hayes,  71. 
Rittenhouse  v.  Leigh,  67. 
Roach  v.  Perry,  136,  163,  164. 
Robb  v.  Mudge,  225. 

v.  Shephard,    74. 

v.  Stevens,  223,  231,  232. 
Robbins  v.  Butler,  291. 

v.  Deveriell,  243. 

v.  Fuller,  274,  275. 

v.  Laswell,  39,  47,  150. 
Robbins  Elec.  Co.  v.  Weber,  295. 
Roberts   v.   Eberhardt,   181,   257, 
259. 

v.  Johnson,  207,  249. 

v.  Kelsey,   261,   280,   2S6. 

v.  McCarty,  176. 

v.  Rowan,  240. 
Robertson  v.  Baker,  177. 

v.  Burrell,  286. 

v.  Corsett,  100. 
Robinson  v.  Allen,  224. 

v.  Anderson,  117. 

v.  Ashton,  122. 

v.  Compher,  35. 

v.  Floyd,  216. 

v.  Goings,  200. 

v.  Haas,  45. 

v.  Magarity,  103. 

v.  Parker,  24,  35,  48. 


Ribinson   v.   Simmons,   163,   282r 
285. 

v.  State,  205. 

v.  Taylor,  27. 

v.Ward,  101. 

v.Wilkinson,  220. 
Robinson    Bank    v.    Miller,    119, 

122,  126,  143. 
Roby  v.  Colehour,  152,  155. 
Rodgers  v.  Clement,  167. 

v.  Meranda,     229,     232,     233, 
234,  235. 
Roessler's  Estate,  In  re,  282. 
Rogers  v.  Batchelor,  247. 

v.  Raynor,  244. 

v.  Rogers,  253. 

v.  Taintor,  108,  112. 
Rohlfing  v.  Carper,  210. 
Rolfe  v.  Dudley,  201. 

v.  Flower,  211. 
Roop  v.  Herron,  226. 
Roosevelt  v.  McDowell,  284. 
Rooth  v.  Quin,  216. 
Roots    v.    Mason    City    S.    &    M. 

Co.,  275. 
Ropes  v.  Colgate,  295,  296. 
Rose  v.  Bradley,  254. 

v.  Coffield,  216. 
Rosenfield  v.  Haight,  14,  22,  40. 
Rosenkranz  v.  Barker,  202,  207. 
Rosenstein  v.  Burns,  271,  272. 
Rosenstiel  v.  Gray,  9. 
Rosenthal  v.  Hasberg,  281. 
Ross  v.  Carson,  251. 

v.  Cornell,  268. 

v.  Henderson,  125. 

v.  Parkyns,  30,  38. 
Rouss  v.  Wallace,  224. 
Rowe  v.  Wood,  168. 
Rowland  v.  Long,  14,  29. 
Rowlandson,  Ex  parte,  14. 
Ruckman  v.  Decker,  47. 
Ruddick  v.  Otis,  39. 
Ruffin,   Ex  parte,   128,   131,   176, 


TABLE  OF  GASES. 


331 


References  are  to  pages. 


178,    226,    231,    232,    261,    262, 
263,  264. 
Rule  v.  Jewell,  258. 
Ruinsey  v.  Briggs,  197. 
Runnels  v.  Moffat,  25. 
Rusling  v.  Brodhead,  284. 
Russell  v.  Lennon,  244. 

v.  McCall,  129. 

v.  Minnesota  Outfit,  251,  253. 

v.  Russell,  175. 
Rust  v.  Cliisolm,  213. 
Rutherford  v.  Hill,  63. 

v.  McConnell,  186,  188. 
Ryall  v.  Rowles,  177. 
Ryder  v.  Gilbert,  136. 

v.Wilcox,    25,    38,    47,    254, 
255. 
Ryland  v.  Hollinger,  60. 


s. 


Sage  v.  Chollar,  232. 

v.  Sherman,  94,  105. 
Sailors   v.   Nixon-Jones   Printing 

Co.,  23,  25,  50. 
St.  Barbe,  Ex  parte,  238. 
St.  John  v.  Hendrickson,  271. 
Salmon  v.  Davis,  245. 
Salter  v.  Edward  Hines  Lumber 
Co.,  210,  211. 
v.  Ham,  21,  30. 
Sanborn  v.  Royce,  128. 
Sanchez  v.  Goldfrank,  269. 
In  re  Sandusky,  228. 
Sandusky  v.  Sidwell,  248. 
Sanford   v.   Board    of    Sup'rs   of 
New  York,  292. 
v.  Mickles,  275. 
Sangston  v.  Hack,  29,  151. 
Sankey  v.  Columbus  Iron  Wr'ks, 

47. 
Sargent  v.  Downey,  56. 
Sarmiento  v.  The  Catherine  C, 
297. 


Satterthwait  v.  Marshall,   258. 

Saul  v.  Kruger,  244. 

Saunders  v.  Bartlett,  138. 

v.  Reilly,   208,   224,   225,   230. 

Savage  v.  Putnam,  221. 

Savery  v.  Thurston,  170. 

Saville  v.  Robert,  210. 

Savings    &    Loan    Soc.    v.    Gibb, 
287. 

Sawyer  v.  First  Nat  Bank,  47. 

Scarf  v.  Jardine,  68,  73,  206,  222. 

Schlater  v.  Winpenny,  263,  264. 

Schleicher  v.  Walker,  225. 

Schlicher  v.  Vogel,  252. 

Schmidlapp  v.  Currie,  224,  225. 

Schnaier  v.   Schmidt,  253. 

Schoneman  v.  Fegley,  276. 

School  District  v.  Insurance  Co., 
292. 

Schuster    v.    Farmers'     &    Mer- 
chants' Nat  Bank,  231. 

Schwabacker  v.  Riddle,  201. 

Scott  v.  Campbell,  35. 
v.  Conway,  248. 
v.  McKinney,  121. 
v.  Raymen,  258. 

Scott's  Appeal,  239. 

Scudder  v.  Ames,  161,  286. 

Scull,  Appeal  of,  67. 

Seabury  v.  Bolles,  49,  67,  69,  71, 
72. 

Seacord  v.  Pendleton,  62. 

Seattle  Board  of  Trade  v.  Hay- 
den,  90. 

Sebastian  v.  Booneville  Academy 
Co.,  255,  272. 

Second  Nat.  Bank  v.  Burt,  232. 
v.  Hall,    62,    63. 

Secor  v.  Keller,  242. 
v.  Lord,    291. 

Seeberger  v.  McCormick,  63. 
v.  Wyman,  192. 

Seger's   Sons    v.   Thomas   Bros., 
224. 


332 


TABLE  OF  CASES. 


References 

Seibert   v.   Bakewell,   297. 
Seibert's  Assignee   v.   Ragsdale, 

L67,   L68. 
Selclen  v.  Hall,  298. 
Seldner    v.     Mt.     Jackson    Nat. 

Bank,  274. 
Selkrig  v.  Davies,  141. 
Sells    v.   Hubbell's   Adm'rs,   160, 

217. 
Serviss  v.  McDonnell,  211. 
Setzer  v.  Beale,  12. 
Sexton    v.    Anderson,    223,    224, 
225. 
v.  Lamb,  115. 
v.  Sexton,  153. 
Shackleford's    Adm'r    v.    Clark, 

285. 
Shafer  v.  Randolph,  71. 
Shaffer  v.  Martin,  204. 
Shain  v.  Du  Jardin,  107. 
Shamburg  v.  Abbott,  221. 
Shanks   v.    Klein,   125,    129,   132, 

143. 
Shapard  v.  Haynes,  215. 
Sharp  v.  Hutchinson,  297. 
Shattuck  v.  Chandler,  192,  283. 

v.  Lawson,   253. 
Shaver  v.  White,  138,  139. 
Shaw  v.  Gait,  19. 
Shea  v.  Donahue,  116. 
Shearer    v.    Shearer,    128,    133, 

134,  135,  141,  143,  144,  282. 
Sheble  v.  Strong,  295,  298. 
Sheldon  v.  Bigelow,  71. 
Shepard  v.  Pratt,  29. 
Sheridan  v.  Medara,  31. 
Sherman  v.  Kreul,  258. 
Sherrod  v.  Langdon,  74,  215. 
Sherwood   v.    St.    Paul    &    C.   R. 
Co.,  86. 
v.  Snow,   190. 
Shoemaker   Piano    Mfg.    Co.,    v. 

Bernard,  211. 
Short  v.  Stevenson,  156. 


are  to  pages. 

Shriver  v.  McCloud,  95. 
Siegel  v.  Chidsey,  199,  262. 
Siegel,  Cooper  &  Co.  v.  Schueck, 

140. 
Sigourney  v.  Munn,  133. 
Sikes  v.  Work,  252. 
Sillitoe,  Ex  parte,  230,  233. 
Silver  v.  Barnes,  54. 
Silveu's  Ex'rs.  v.  Porter,  89. 
Simmons  v.  Ingram,  63,  85. 
Simonton  v.  McLain,  91. 

v.  Sibley,  188. 
Simpson  v.  Leech,  132. 

v.  Tenney,  94. 
Simpson's  Claim,  184. 
Sims  v.  Smith,  264. 
Simson  v.  Ingham,  218. 
Sindelare  v.  Walker,  131,  244. 
Singer    v.    Carpenter,    224,    225, 
226. 

v.Kelly,  293,  297. 
Singleton  v.  Knight,  193. 
Sirrine  v.  Briggs,  139. 
Sizer  v.  Daniels,  54. 

v.Ray,  210. 
Skavdale  v.  Moyer,  138,  139. 
Skillman  v.  Lachman,  10. 
Skinner  v.  Dayton,  9,  267,  291. 

v.  Tinker,  265. 
Skipp  v.  Harwood,  177. 
Slater  v.  Slater,  110,  111,  122. 
Slemmer's  Appeal,  267. 
Sloan  v.  Moore,  188. 
Slocum  v.  Hooker,  248. 
Slutts  v.  Chafee,  206. 
Smith,  Ex  parte,  122. 
Smith,  In  re,  138. 
Smith  v.  Argall,  295. 

v.  Ayrault,  162. 

v.  Black,  222. 

v.  Brannon,  57. 

v.  Brown,  163. 

v.  Burnham,  86. 

v.  Canfield,  248. 


TABLE  OF  CASES. 


333 


References  are  to  pages. 


Smith  v.  Collins,  78,  191,  196. 

v.  Colorado  Fire  Ins.  Co.,  63. 

v.  Craven,  199. 

v.  Emerson,  139. 

v.  Everett,  110,  131. 

v.  Heineman,  226. 

v.  Hill,  68,  71. 

v.  Jeyes,  148,  149,  272. 

v.  Kemp,  255. 

v.  Ludlow,  276. 

v.  Mulock,  267. 

v.  Orser,  138. 

v.  Ramsey,  146. 

v.  Shelden,  221,  276,  278. 

v.  Sloan,   78,   189,  190. 

v.  Small,   35,  113,  120. 

v.Smith,  121,  228,  285. 

v.  Tarlton,  85,  86,  121,  132. 

v.  Vandeburg,   31,   32,   264. 

v.Walker,  25. 

v.  Watson,  46. 

v.Wood,  129. 
Smythe  v.  Harvie,  274. 
Snaith  v.  Burridge,  185. 
Sneed  v.  Deal,  155. 
Snell  v.  Crowe,  138. 

v.  De  Land,  35,  94. 

v.  Dwight,  95. 

v.  Stone,  90. 
Snider's  Sons  Co.  v.  Troy,  62. 
Snodgrass  v.  Reynolds,  50. 
Snodgrass's  Appeal,  224,  231. 
Snyder  v.  Burnham,  10. 

v.  Seaman,    149. 
Sohier  v.  Johnson,  108. 
Sohns  v.  Sloteman,  30. 
Solly  v.  Forbes,  219. 
Solomen  v.  Kirkwood,  9,  265,  267. 
Somerby  v.  Buntin,  47,   85,  259. 
Somerset      Potters      Works      v. 

Minot,  237. 
Soper  v.  Fry,  192. 
Southern  v.  Grim,  214. 


Southern       Fertilizer      Co.       v. 

Reams,  19. 
Southwick  v.  McGovern,  215. 
Sowerby  v.  Butcher,  249. 
Spalding  v.  Wilson,  125. 
Sparrow  v.  Chisman,  245,  246. 

v.  Kohn,   109. 
Spaulding   v.    Stubbings,    24,   40, 

47. 
Speake  v.  Prewitt,  80. 
Speer  v.  Bishop,  212. 
Spencer  v.  Field,  249. 

v.  Jones,  49,  93,  94,  226. 
Spencer     Optical     Mfg.     Co.     v. 

Johnson,  295,  298. 
Sperry's  Estate,  In  re,  237. 
Sprout  v.  Crowley,  251. 
Spry  Lumber  Co.,  John,  v.  Chap- 
pell,  230. 
Spruck  v.  Leonard,  264. 
Spurr  v.  Cass,  243. 
Staats  v.  Bristow,  131. 
Stables  v.  Eley,  74,  200,  215. 
Stafford  v.  Gold,  129. 

v.  Sibley,  29. 
Stafford    Nat.    Bank    v.    Palmer, 

62,  64. 
Stanchfield  v.  Palmer,  15. 
Standard    Wagon    Co.    v.    Few, 

185. 
Standish  v.  Babcock,  176. 
Stanhope  v.   Swafford,  200. 
Stanton    v.    Westover,    225,    226, 

227. 
Stapleton   v.   King,   11,   43. 
Starbuck  v.  Shaw,  252. 
Starr  v.  Case,  218. 
State  v.  How,  62. 
v.  Hunt,  30. 
v.  Withrow,  281,  283. 
State  Bank  v.  O.  S.  Kelley  Co., 

56. 
Staver    &    Abbott    Mfg.    Co.    v. 

Blake,  298. 


334 


TABLE  OF  CASES. 


References  are  to  pages. 


Stead  v.   Salt,  187,   191. 
Stearns  v.  Haven,  74. 
Stecker  v.  Smith,  188. 
Steele  v.  First  Nat.   Bank,  187, 

194. 
Steiglitz  v.  Egginton,  191,  198. 
Stein  v.  Robertson,  88. 
Steiner  v.  Peters  Store  Co.,  227. 

v.  Steiner   Land    &    Lumber 
Co.,  282. 
Steinfeld    v.    Nat.    Shirt    Waist 

Co.,  112. 
Stephens  v.  Reynolds,  189,  197. 
Stevens,  In  re,  222. 
Stevens  v.  Faucet,  21,  46,  249. 

v.  Gainesville  Nat.  Bank,  25. 

v.  McLachlan,  189. 

v.  Perry,  208. 
Steward  v.  Blakeway,  123. 
Stewart,  Assignment  of,  224. 
Stewart,  In  re,  229. 
Stewart  v.  Robinson,  261,  282. 
Stimson  v.  Lewis,  291. 
Stockdale  v.  Maginn,  279. 
Stockman  v.  Michell,  30. 
Stockton  v.  Frey,  207,  249. 
Stockwell      v.      Inhabitants     of 
Brewer,  101. 

v.  United  States,  202. 
Stokes  v.  Findlay,  63. 

v.  Hodges,  166. 
Stone  v.  Aldrich,  255. 

v.  West  Jersey  Ice  Mfg.  Co., 
30. 
Storm  v.  Roberts,  241. 
Story  v.   Richardson,  244. 
Stout  v.  Baker,  208. 

v.  Zulick,  62. 
Strader  v.  White,  14. 
Straus  v.  Kohn,  183,  189. 
Strauss  v.  Frederick,  130. 
Strong  v.  Lord,  132,  143,  145. 
Struthers  v.  Pearce,  155. 
Stuart  v.   Gladstone,   175. 


Stubbs  v.  Sargon,  98. 
Stumph  v.  Bauer,  139. 
Suan  v.  Caffe,  90. 
Sullivan   v.   Campbell,   291. 

v.  Visconti,  187. 
Summer  v.  Powell,  287. 
Sutro  v.  Wagner,  272. 
Sutton  v.  Dillaye,  274. 
Swan  v.  Gilbert,  228. 

v.  Steele,  198. 
Swann  v.  Sanborn,  231. 
Swasey  v.  Antram,  89. 
Sweeney  v.  Neely,  168,  188. 
Sweet  v.  Morrison,  255. 
Sweetzer  v.  Mead,  192. 
Swift  v.  Jewsbury,  201. 
Swope  v.  Burnham,  109. 
Swords  v.  Owen,  108. 
Sydam  v.  Cannon,  221. 
Sykes  v.  Beadon,  95. 
Sylvester  v.  Smith,  250. 


Tabb  v.  Gist,  7,  9. 
Taft  v.  Buffum,  269. 

v.  Schwamb,    113,    117,    135, 
165. 
Talcott  v.  Dudley,  262. 
Talmage  v.  Millikin,  192. 
Tapley  v.  Butterfield,  192. 
Tappan   v.    Blaisdell,   139. 
Tarbell  v.  Page,  62. 
Tarver   v.   Evansville   Furniture 

Co.,  276. 
Tassey  v.   Church,   253. 
Tate  v.  Clements,  277. 
Tayloe  v.  Bush,  25,  44. 
Taylor  v.  Castle,  10. 

v.  Church,    244. 

v.  Coffing,  116,  117,  135-137. 

v.  Davis,  169. 

v.  Dorr,   163. 

v.  Hotchkiss,   262. 


TABLE  OF  CASES. 


335 


References  are  to  pages. 


Taylor  v.  Hutchison,  263. 

v.  Penny,  8. 

v.  Post,   218. 

v.  Riggs,  231. 

v.  Taylor,   130. 

v.  Terme,  14,  30. 

v.  Thompson,  253. 
Teague  v.  Lindsey,  225. 
Tebbetts  v.  Dearborn,  154. 
Teed  v.  Parsons,  54. 
Tennant,  Ex  parte,  22,  28. 
Tenney  v.  Foote,  95,  96,  201. 

v.  Johnson,    231. 
Tevis  v.  Carter,  255. 
Texas  &  P.  R.  Co.  v.  Suissen,  30. 
Thayer  v  Augustine,  32,  33. 

v.  Badger,  163. 

v.  Humphrey,  231. 

v.  Lane,  131. 
Thicknesse  v.  Bromilow,  189. 
Thillman  v.  Benton,  31. 
Third  Nat.   Bank  v.   Snyder,  78, 

189,  190. 
Thomas  v.  Atherton,  160,  162. 

v.  Dakin,  58,  292. 

v.  Green,  66,  70. 

v.  Lines,  150. 

v.  Pennrich,  247. 
Thompson  v.  Bowman,  128. 

v.  First  Nat.  Bank,  48,  67,  71. 
72. 

v.  Gray,  109. 

v.  Noble,  167,  275. 

v.  Percival,  220. 

v.  Smith,  254. 

v.  Snow,  32. 
Thomson  v.  Davenport,  250. 
Thornton  v.  Dixon,  141. 

v.  George,  42. 

v.  McDonald,  29. 
Thursby  v.  Lidgerwood,  121,  128, 

213,  274. 
Thurston  v.  Horton,  56,  57. 

v.  Perkins,  51. 


Tidd  v.  Rines,  104,  124,  125. 
Tilford  v.  Ramsey,  104. 
Tilge  v.  Brooks,  295,  299. 
Tillar  v.  Cook,  258. 
Tillinghast  v.  Champlin,  132. 
Titcomb  v.  James,  202. 
Tobey  v.  McFarlin,  131. 
Tobias  v.  Blin,  32. 
Todd  v.  Jackson,  203. 

v.  Pennington,  95. 

v.  Raff erty's  Adm'rs,  157. 
Tom  v.  Goodrich,  198. 
Tomlinson  v.  Bricklayers'  Union 

No.  1,  59. 
Tood  v.  Rafferty's  Adm'rs,  96. 
Toof  v.  Duncan,  204. 
Topping,  Ex  parte,  239. 
Topping  v.  Paddock,  113. 
Towle  v.  Meserve,  251. 
Townsend  v.  Goewey,  148. 
Tracy  v.  Tuffly,  295,  298. 
Traphagen  v.  Burt,  121,  258. 
Tredwe  v.  Rascoe,  138. 
Trego  v.  Hunt,  168. 
Troughton  v.  Hunter,  213. 
Trowbridge  v.  Cross,  132. 

v.  Scudder,  64. 
Trundle  v.  Edwards,  284. 
Tucker  v.  Cole,  181. 

v.  Oxley,  222. 
Turner  v.  Jaycox,  232. 

v.  Major,  110. 

v.  Smith,  138. 
Tutt  v.  Land,  167. 
Tygart  v.  Wilson,  170. 
Tyler  v.  Scott,  35. 

v.  Waddingham,  196. 
Tyrrell  v.  Washburn,  290,  291. 

u. 

Uhler  v.  Semple,  6,  153,  177. 
Ulery  v.  Ginrich,  189. 
Union    Nat.    Bank    v.    Bank    of 
Commerce,  234. 


136 


TABLE  OF  CASES. 


References  are  to  pages. 

United  States  v.  Colin,  205. 

United  States  Bank  v.  Binney, 
76,  197. 

United  States  Exp.  Co.  v.  Bed- 
bury,  241,  292. 

Unity  Ins.  Co.  v.  Cram,  63. 

Ussery  v.  Crusman,  295,  298. 


V. 

Vacarro  v.  Toof,  215. 
Vail  v.  Winterstein,  89. 
Valentine  v.  Hiekle,  210. 

v.  Wysor,  286. 
Van  Aernani  v.  Bleistein,  292. 
Van  Aken  v.  Clark,  132. 
Van  Brunt  v.  Applegate,  188. 
Vance  v.  Blair,  184. 
Vanderburg  v.  Bassett,  187. 
Vanderburgh  v.  Hull,  39. 
Vandike's  Appeal,  139. 
Vandike  v.  Rosskam,  298. 
Vanhorn  v.  Corcoran,  298. 
Van    Ingen    v.     Whitman,     295, 

296. 
Van    Keuren    v.    Parmelee,    275, 

277. 
Van  Kleeck  v.  McCabe,  231,  261. 
Van  Kuren  v.  Trenton  L.  &  M. 

Mfg.  Co.,  24,  25,  257. 
Van  Name  v.  Van  Name,  136. 
Vannerson  v.  Cheatham,  89. 
Van  Ness  v.  Fisher,  264. 
Van  Reimsdyk  v.  Kane,  106. 
Van  Riper  v.  Poppenhausen,  293. 
Van  Valen  v.  Russell,  237. 
Van  Valkenburg  v.  Bradley,  278. 
Van  Voorhis  v.  Webster,  122. 
Venable  v.  Levick,  188. 
Vere  v.  Ashby,  211. 
Vernon  v.  Manhattan  Co.,  216. 
Vicory  v.  Strausbaugh,  138. 
Viles  v.  Bangs,  247. 
Vinsen  v.  Lockard,  88. 
Vinson  v.  Beveridge,  29,  70,  71, 

73. 


Von  Schmidt  v.  Huntington,  291. 
Voorhees  v.  Jones,  40,  41. 
Voorhis  v.  Baxter,  284. 
v.  Child's  Ex'r,  288. 
Vredenburg  v.  Behan,  62. 

w. 


Wadley  v.  Jones,  258. 
Waggoner  v.  First  Nat.  Bank,  2, 
26,  28,  30,  31,  37,  40,  41,  48,  49. 
Wagner  v.  Simmons,  78,  189, 190. 
Wagnon  v.  Clay,  190. 
Wahl  v.  Barnurn,  86. 
Wait  v.  Brewster,  68. 
Wakeham,  In  re,  97. 
Walburn  v.  Ingilby,  291. 
Walden  v.  Sherburne,  39,  41,  276. 
Wallace  v.  Fitzsimmons,  281. 

v.  Kelsall,  245,  246. 
Walling  v.  Burgess,  132. 
Walker  v.  Anglo-American  Mort- 
gage  &   Trust   Co.,   201, 
207. 

v.  Davis,  269. 

v.  Doane,  284. 

v.  Eyth,  232. 

v.  Wait,  100. 

V.Whipple,  265,  266,  267. 
Walsh  v.  Lennon,  78,  191. 
Walstrom  v.  Hopkins,  220. 
Walter  v.  Herman,  233. 
Wantling  v.  Howarth,  264. 
Wapello  County  v.  Bigham,  285.. 
Ward  v.  Barber,  275. 

v.  Bodeman,  57. 

v.  Brigham,  62. 

v.  Espy,  125. 

v.  Motter,  249,  250. 

v.  Thompson,  47,  115. 

v.  Tyler,  276. 
Warder  v.  Newdigate,  247. 
Warfel  v.  Calder,  145. 
Warner  v.  Griswold,  95,  201,  242,. 
243. 


TABLE  OF  CASES. 


337 


References 

Warner  v.  Leisen,  272. 
Warren  v.  Ball,  215. 

v.  Farmer,  230,  236. 

v.  Schainwald,  153. 

v.  Sterns,  251. 
Washburn  v.  Washburn,  155. 
Washington  v.  Washington,  116. 
Waterbury  v.  Head,  242. 

v.  Merchants'     Union     Exp. 
Co.,  172,  292. 
Waterer  v.  Waterer,  123. 
Waterman  v.  Hunt,  226. 
Waters  v.  Taylor,  138,  140. 
Watson,  Ex  parte,  66. 
Watson  v.  Hinchman,  200. 

v.  Murray,  95. 
Watt  v.  Kirby,  250. 
Waugh  v.  Carver,  13,  14,  17,  18, 

22,  30,  66,  70. 
Waverly  Nat.  Bank  v.  Hall,  40. 
Way  v.  Stebbins,  280. 
Wayt  v.  Peck,  139. 
Weaver  v.  Rogers,  245,  246. 

v.  Tapscott,  106,  188. 
Webb  v.  Fordyce,  168. 

v.  Johnson,  12. 
Webster  v.  Clark,  21,  24,  27,  33, 
47,  49,  71,  72. 

v.Webster,  69. 
Wedderburn  v.  Wedderburn,  122. 
Wehrman  v.  McFarlan,  6,  22,  54, 

290. 
Weil  v.  Guerin,  248,  285. 

v.  Jaeger,  229. 
Weirick  v.  Graves,  196. 
Welker  v.  Wallace,  203. 
Welles  v.  March,  262. 
Wells  v.  Babcock,  165. 

v.  Carpenter,  254. 

v.  Ellis,  262. 

v.  Gates,  290,  291. 

v.  McGeoch,  153. 

v.  Marsh,  192. 

v.  Mitchell,  245,  246,  251. 
99 


are  to  pages. 

Welsh    v.    Canfield,    135. 
Wessels  v.  Weiss,  13,  18,  32. 
West,  In  re,  237. 
West  v.  Skip,  128,  130,  131,  138, 

176,  177,  232,  233. 
Western    Stage    Co.    v.    Walker, 

172,  274. 
West     Hickory     Min.     Ass'n     v. 

Reed,  126,  143. 
West     Philadelphia      Bank      v. 

Gerry,  222. 
West    Point    Foundry    Ass'n    v. 

Brown,  60. 
Weston  v.  Ketcham,  155. 
Wetherbee  v.  Potter,  255. 
Wheat  v.  Rice,  211. 
Wheatley's     Heirs    v.     Calhoun, 

120. 
Wheeler  v.  Arnold,  160. 
v.  Farmer,  27,  29,  42. 
v.  McEldowney,  67. 
v.  Sage,  158. 
Wheeling     Corrugating     Co.     v. 

Veach,  220. 
Wheelock  v.  Moulton,  59. 
Wherman  v.  McFarlan,  180. 
Whipple  v.  Parker,  85. 
Whitaker  v.  Brown,  203. 
Whitcomb  v.  Converse,  113,  116, 
117,  136,  166. 
v.  Whiting,  277. 
White  v.  Cuyler,  198. 
v.  Eiseman,  298. 
v.  Jones,  139. 
v.Woodward,  138. 
Whitehead    v.    Bank    of    Pitts- 
burgh, 279. 
Whitehill  v.  Shickle,  39. 
Whiting  v.  Farrand,  274. 

v.  Leakin,  29,  30,  84,  92,  115, 
265. 
Whitlock  v.  McKechnie,  103. 
Whitman  v.  Bowden,  156. 
v.  Keith,  241. 


338 


TABLE  OF  CASES. 


References 

Whitton  v.  State,  205. 
Whitwell  v.  Arthur,  271. 

v.  Perrin,  222. 
Whitworth  v.  Harris,  259. 

v.  Patterson,  237. 
Wickham  v.  Wickham,  219. 
Wiegand  v.  Copeland,  126. 
Wiesenfeld  v.  Byrd,  285. 
Wiggin  v.  Blackshear,  227. 

v.  Goodwin,  269. 
Wiggins  v.  Blackshear,  225. 
Wilcox  v.  Derickson,  262. 

v.  Dodge,  38. 

v.  Kellogg,  224. 

v.  Wilcox,  144. 
Wild  v.  Davenport,  19,  37,  261. 

v.  Dean,  220. 

v.  Milne,  133,  134. 
Wilder  v.  Keeler,  228,  229,  234. 
Wiley  v.  Logan,  243. 
Wilkerson  v.   Henderson,  287. 
Wilkins  v.  Davis,  297. 

v.  Pearce,  192,  194. 
Wilkinson  v.  Frasier,  41,  44. 

v.  Henderson,  287. 
Willet  v.  Brown,  143. 

v.  Chambers,  77,  203. 
Williams,  Ex  parte,  211,  288. 
Williams,  In  re,  106. 
Williams   v.   Bank  of  Michigan, 
291. 

v.  City  of  Saginaw,  101. 

v.  Frost,  192. 

v.  Gillies,  86,  121,  125,  143. 

v.  Henshaw,  254. 

v.  Jones,  85. 

v.  Lewis,  138,  139,  182. 

v.  Muthersbaugh,  207. 

v.  Robbins,  250. 

v.  Shelden,  126. 

v.  Soutter,  39. 

v.  Thomas,  190. 

v.  Whedon,  283. 
Williamson  v.  Adams,  178. 


are  to  pages. 

Williamson  v.  Barbour,  181. 

v.Barton,  250. 

v.  Johnson,  106. 
Willis  v.  Barron,  251. 

v.  Bremner,  199. 

v.  Crawford,  5. 
Wills  v.  Jones,  244. 

v.  Simmonds,  35. 
Willson  v.  Nicholson,  129. 

v.  Owen,  95. 
Wilson  v.  Bean,  295. 

v.  Black,  119. 

v.  Campbell,  50,  51. 

v.  Church,  272. 

v.  Greenwood,  135. 

v.  Keller,  279. 

v.  Richards,   183. 

v.  Robertson,  225. 

v.  Rockland  Mfg.  Co.,  242. 

v.  Simpson,  151. 

v.  Soper,  225,  283,  284. 

v.  Tumman,  200. 

v.  Wallace,  243. 

v.  Waugh,  269. 

v.  Whitehead,  17,  210. 
Wilson's  Ex'rs   v.   Cobb's  Ex'rs, 

4,  5. 
Winchester  v.  Glazier,  149,  166, 

167. 
Winne  v.  Brundage,  30. 
Winship     v.     Bank     of     United 
States,    78,    81,    107,    181,    183, 
184,  196. 
Winstanley  v.  Gleyre,  93,  94,  156. 
Winter  v.  Pipher,  39. 

v.  Stock,  124. 
Wipperman  v.  Stacy,  194. 
Witter  v.  McNiel,  199. 
Wittkowsky  v.  Ried,  218. 
Wittram  v.  Van  Wormer,  199. 
Woelfel  v.  Thompson,  117. 
Wolcott  v.  Gibson,  95. 
Wolf  v.  Mills,  201. 

v.  Selling,  124. 


TABLE  OF  CASES. 


339 


References  are  to  pages. 


Wolfe  v.  Gilmer,  136. 

v.  Joubert,  108,  109. 
Wolff  v.  Madden,  210. 
Wood  v.  Beath,  33,  174. 

v.  Braddick,  276,  288. 

v.  Connell,  9. 

v.  Culen,  248. 

v.  Cullen,  53. 

v.  Duke  of  Argyll,  60,  70. 

v.  Erie  R.  Co.,  109. 

v.  Luscomb,  200,  207,  249. 

v.  Pennell,  71,  72. 

v.  Woad,  175. 
Woodhouse  v.  Duncan,  250. 
Woodling  v.  Knickerbocker,  202. 
Woodmansie    v.    Holcomb,    224, 

225. 
Woodruff  v.  King,  191,  214. 

v.  Scaife,  183,  184. 
Woods  v.  Wilder,  87,  263. 
Woodson  v.  Wood,  277. 
Woodward  v.  Cowing,  54,  56. 

v.  McAdam,  124. 
Woodward-Holmes  Co.   v.  Nudd, 

143,  145. 
Woodworth  v.  Bennett,  95,  96. 
Worcester  Corn  Exchange  Co.,  In 

re,  160,  161. 
Worley  v.  Smith,  255. 
Wright  v.  Boynton,  68. 

v.  Duke,  153. 

v.  Eastman,  255. 

v.  Herrick,  248. 

v.  Hooker,  106,  107,  108. 


Wright  v.  Hunter,  160. 

v.  Taylor,  22. 

v.Ward,  138. 
Wyckoff  v.  Anthony,  187. 
Wycoff  v.  Purnell,  256. 
Wyman  v.  Stewart,  241. 


Yale  v.  Eames,  276. 

v.  Taylor  Mfg.  Co.,  108. 
Yarbrough  v.  Bush,  241. 
Yates  v.  Lyon,  88. 
Yeager  v.  Wallace,  193,  212. 
Yeoman  v.  Lasley,  93,  94. 
Yetzer  v.  Applegate,  170. 
Yonge,  Ex  parte,  238. 
York  v.  Orton,  220. 
York  County  Bank's  Appeal,  228, 

231,  232. 
Yorkshire  Banking  Co.  v.  Beat- 
son,  197. 
Youmans  v.  Heartt,  218. 
Young,  In  re,  31. 
Young  v.  Axtell,  70. 

v.  Scoville,  282,  285. 

v.  Wheeler,  86,  188. 


Zabriskie  v.  Hackensack,  173. 
Zell's  Appeal,  163,  285. 
Zimmerman  v.  Erhard,  109. 


INDEX. 


ACCOMMODATION  PAPER  — 
power  of  partner  to  give,  192. 

ACCOUNTS  AND  ACCOUNTING  — 
interest  on  balances,  164  et  seq. 
surviving  partner  must  account  to  representatives  of  deceased 

partner,  130. 
partnership  accounts,  168. 
right  to  inspect  accounts,  168. 

ACTIONS  — 

see,  also,  "Parties." 

by  or  against  firm,  240  et  seq.  -""' 

in  firm  name,  240,  241. 

by  the  firm,  241. 

against  the  firm,  247. 

between  partners,  250. 

rule  that  no  action  at  law  lies  between  partners,  250. 
exceptions  to  rule,  250,  252. 

between  firms  with  common  member,  253. 

— between  partners  on  individual  obligations,  254. 
suits  in  equity,  256. 

specific  performance  between  partners,  258. 
by  and  against  surviving  partners,  284. 

ACTIVE  PARTNERS  — 
who  are,  79. 

ADMISSION  — 

by  partner,  when  binding  on  firm,  181. 
of  new  member  to  firm,  6,  263. 

ADVANCES  — 

interest  on,  allowance  in  accounting,  167. 

AFFIDAVIT— 

accompanying  certificate  of  limited  partnership,  295. 


342  INDEX. 

References  are  to  pages. 
AGENCY  — 

mutual  agency  as  a  test  of  partnership,  4,  19. 

agent  or  servant  sharing  profits  in  lieu  of  salary,  not  a  partner, 
29. 
ALIENS  — 

capacity  to  be  partners,  87. 
ALTERATION  — 

in  constitution  of  limited  partnership,  296. 
APPLICATION  — 

of  assets  to  liabilities,  223. 

ARBITRATION  — 

power  of  partnership  to  bind  firm  by  submission  to,  191. 
ARTICLES  OF  PARTNERSHIP  — 

definition,  147. 

usual  provisions  in,  148. 

construction,  149. 

duty  to  conform  to,  169. 

provision  for  sale  of  share  at  valuation,  134. 

stipulation  for  transfer  of  shares,  8. 

ASSETS  — 

application  of,  to  liabilities,  223. 
application  by  partners,  223. 

fraudulent  conveyances,   224. 
application  by  court,  227. 
priorities  in  firm  property,  229. 

firm  creditors  have  priority,  229. 

exceptions   to    rule,    conversion    of   firm    into   separate 

property,  232. 
fraudulent  conversion  of  individual  property,  232. 
separate  business,  233. 
partners  are  prior  individual  creditors,  233. 
partners  discharged  in  bankruptcy,  233. 
priorities  in  separate  property,  234. 

separate  creditors  have  priority,  234. 

ASSIGNMENT  — 

of  shares,  see  "Shares." 

of  partner's  interest,  effect,  128,  269. 

ASSIGNMENT  FOR  BENEFIT  OF  CREDITORS  — 
powers  of  partner,  192. 

ASSOCIATIONS  — 

not  partnerships,  53. 


INDEX.  343 

References  are  to  pages. 

ASSUMPTION  OF  DEBTS  — 

by  incoming  partner,  210. 
ATTACHMENT  — 

of  partner's  interest  for  individual  debt,  137. 
ATTORNEYS  — 

implied  powers  of  member  of  firm  of  attorneys,  189. 

AUTHORITY  OF  PARTNER  — 
see  "Powers  of  Partner." 

B. 

BANKRUPTCY  — 

effect  of  discharge  to  terminate  liability,  222. 

effect  to  dissolve  firm,  262. 
BILLS  AND  NOTES  — 

powers  of  partners  with  respect  to,  189. 

liabilities  of  partners  on,  197. 

payable  to  one  partner,  action  on,  244. 
BOOKS   OF  ACCOUNT  — 

duty  to  keep,  168,  169. 

right  to  inspect,  168,  169. 
BORROWING  — 

power  of  partner,  190. 

BOVILL'S  ACT  — 

effect,  34,  note. 
BREACH  OF  TRUST  — 

liability  for,  200. 

misapplication  of  money  or  property  received  for  or  in  custody 
of  firm,  202. 

employment  of  trust  money  for  partnership  purposes,  204. 

joint  and  several  liability,  207. 

c. 

CAPACITY  — 

of  persons  to  become  partners,  87. 

CAPITAL  — 

common  stock  or  capital  not  essential  to  partnership,  46. 

definition  and  nature,  113. 

distinguished  from  partnership  property,  113,  114. 

of  partner  distinguished  from  his  share,  114. 

what  may  be  contributed,  114. 


344  INDEX. 

References  are  to  pages. 
CAPITAL  (continued)  — 

rights  of  partners  as  to,  115,  116. 
to  increase  or  diminish,  116. 
return  of,  on  dissolution,  116. 
presumption  of  equality,  116,  117. 
is  partnership  property,  120. 
interest  on,  allowance  in  accounting,  166  et  seq. 
CARE  — 

duty  of  partner  to  exercise,  170. 

CARRIERS  — 

connecting  carriers  as  partners,  45. 
CLANDESTINE    PROFITS  — 

right  of  partner  to  obtain,  154. 
CLUBS  — 

members  of,  not  partners,  53. 
COMMON  MEMBER  — 

actions  between  firms  with,  253. 
COMMUNITY  OF  PROFITS  — 

see  "Co-ownership." 

COMPENSATION  — 

right  of  partner  to  compensation  for  services,  163. 
surviving  partners,  right  to,  285. 

COMPETENCY  — 

of  persons  to  become  partners,  87. 
COMPETITION  — 

right  of  partner  to  compete  with  firm,  157,  158. 
retiring  partner,  110. 
CONDITIONS  PRECEDENT  — 

waiver  of,  51. 

CONFESSION  OF  JUDGMENT  — 

power  of  partner,  192. 
CONNECTING  CARRIERS  — 

as  partners,  45. 
CONSENT— 

mutual   assent   of  all   parties   necessary   to   constitute   partner- 
ship, 5. 

delectus  personarum,  6. 
CONSIDERATION  — 

of  contract  of  partnership,  92. 

premium  for  admission  to  partnership,  93. 


INDEX.  345 

References  are  to  pages. 
CONTINUANCE  — 

of  partnership  without  new  articles,  151. 

CONTRACTS  — 

creating  partnerships,   see  "Partnerships." 
partnership  not  a  contract,  but  a  status,  3. 
an  essential  element  of  partnership,  4. 
agreements  not  concluded  do  not  constitute  partnership,  5. 
for  future  partnerships,  49. 
of  partnership,  83. 
construction,  21. 
general  requisites,  83. 
formalities,  83. 

necessity  of  writing,  statute  of  frauds,  84. 
who  may  become  partners,  87. 
aliens,  87. 
infants,  88. 
insane  persons,  88. 
married  women,  89. 
corporations,  90. 
husband  and  wife,  89. 
partnerships,  91. 
number  of  partners,  91. 
consideration,  92. 
premium,  93. 
purposes  of  partnership,  93. 
illegal  partnerships,  94. 

effect  of   illegality,  95. 
liability  of  partners  on,  195. 
bills  and  notes,  197. 
sealed  instruments,  198. 
reception  of  benefit  by  firm,  198. 
joint  and  several  liability,  206. 
in  name  of  one  partner,  parties,  247,  250. 
CONTRIBUTION  AND  INDEMNITY  — 
right  of  partner  to,  159. 
in  illegal  transaction,  161. 
limit  as  to  amount  of,  161. 
how  and  when  enforced,  162. 

CONTRIBUTIONS— 

what  may  be  contributed  to  capital,  114. 

return  of,  on  dissolution,  116. 

of  general  and  special  partners  in  limited  partnerships,  295. 


340  INDEX. 

References  are  to  pages. 
CONVERSION  — 

of  firm  realty  into  personalty,  140. 
CO-OPERATIVE   STORES  — 

members  of,  not  partners,  54. 
CO-OWNERSHIP  — 

of  profits  must  be  intended  to  constitute  partnership,  26. 

the  ultimate  test  of  partnership,  3,  16,  26. 

distinguished  from  partnership,  55. 

CORPORATIONS  — 

distinguished  from  partnerships,  58. 
promoters  of,  not  partners,  59. 

stockholders    in    illegal    or   defective   corporations,   liability   as 
partners,  61. 

illegal  or  unauthorized  corporations,  61. 

de  facto  corporations,  62. 

defects   in  organization,   62. 

knowledge  of  lack  of  corporate  existence,  64. 
as  partners,  90. 

CREDITORS  — 

see,  also,  "Rights  and  Liabilities." 
priorities  of  firm  and  individual  creditors,  229. 
rights  ajid  liabilities  on  dissolution,  288. 
application  of  assets  to  debts,  223. 

CRIMES  — 

liability  for  crimes  of  co-partners.  205. 

D. 

DEATH  — 

of  partner,  survivorship,  128,  129. 

realty  descends  to  heirs  of  deceased  partner,  132. 

of  partner  works  dissolution  by  operation  of  law,  261. 

rights  and  liabilities  of  surviving  partner,  280. 

rights  and  liabilities  of  estate  of  deceased  partner,  286. 

DEBTS— 

see  "Creditors,"  "Rights  and  Liabilities." 

liability  of  subpartner  for  debts  of  principal  firm,  12. 

DEEDS  — 

of  realty  to  be  held  as  partnership  property,  124,  127. 

power  of  partner,  191. 

liability  of  partner  on  sealed  instruments,  198. 

by  partnership,  how  executed,  198. 


INDEX.  347 

References  are  to  pages. 

DEFINITIONS— 

active  partners,  79. 

articles  of  partnership,  147. 

capital  of  firm,  113. 

delectus  personarum,  6,  7. 

dormant  partners,  80. 

general  partnership,  76. 

general  and  special  partners,  82,  294. 

gross  profits,  42. 

gross  returns,  42. 

incoming  partners,  81. 

joint-stock  companies,  290. 

lien  of  partner,  176. 

limited  partnerships,  293. 

liquidating  partner,  81. 

nominal  partners,  81. 

ostensible  partners,  79. 

partner's  share,  127. 

partnership,  2. 

partnership  property,  118. 

quasi-partners,  81. 

retiring  partner,  81. 

secret  partners,  79. 

silent  partners,  79. 

special  or  particular  partnerships,  77. 

trading  and  non-trading  partnerships,  78. 

universal  partnerships,  76. 

DELECTUS  PERSONARUM  — 

definition,  6,  7. 

an  essential  element  of  partnership,  7. 
exceptions  to  rule,  10. 

the  fundamental  principle,  7. 

consent  to  transfer  of  interest  given  in  advance,  8. 

none  in  joint-stock  companies,  11. 

principle  not  violated  by  subpartnerships,  11. 
DISQUALIFICATION  — 

of  one  partner  to  sue,  effect  on  cause  of  action,  245. 

DISSENT  — 

restriction  of  power  of  partner  by,  193. 

DISSOLUTION  — 

change  of  membership  operates  as,  8. 


348  INDEX. 

References  are  to  pages. 
DISSOLUTION  (continued)  — 

transfer  of  shares  in  mining  partnerships  does  not  operate  as, 

10. 
return  of  capital  on,  116. 
notice  of,  213. 

dormant  and  secret  partners,  214. 
sufficiency  of  notice,  216. 
torts,  215. 
of  partnership,  260  et  seq. 
by  operation  of  law,  260. 
how  effected,  260. 
death  of  partner,  261. 
insolvency  or  bankruptcy,  262. 
marriage  of  female  partner,  262. 
business  of  partnership  becoming  unlawful,  263. 
by  act  of  parties,  263. 

expiration  of  term,  263. 
accomplishment  of  object,  263. 
by  mutual  consent,  264. 
by  act  of  one  partner,  265. 

no  dissoluble  partnership,  266  .et  seq. 
by  change  in  membership,  268. 
transfer  of  partner's  interest,  269. 
by  decree  of  court,  269. 
grounds  for,  270. 
fraud,  270. 
insanity,  271. 

hopelessness  of  success,  272. 
misconduct  of  partner,  272. 
rights  and  liabilities  after  dissolution,  273. 
of  partners  generally,  274. 
of  liquidating  partners,  277. 
of  surviving  partners,  280. 

actions  by  and  against  surviving  partners,  280. 
particular  powers,  282. 
right  to  compensation,  282. 
liability  to  estate  of  decedent,  282. 
of  estate  of  deceased  partner,  286. 
of  creditors,  288. 
of  limited  partnership,  298. 

DISTRIBUTION  — 

of  assets,  227  et  seq. 


INDEX.  349 

References  are  to  pages. 

DORMANT  PARTNERS  — 
who  are,  80. 
as  a  party  plaintiff,  242. 

DOWER  — 

in  partnership  lands,  145. 

E. 

ENTITY  — 
firm  as,  97. 

limited  recognition  as,  99. 
mercantile  and  legal  view  of  firm,  99. 
statutory  recognition  of  firm  as,  100. 

EQUALITY  — 

presumption  of,  in  partnership  property,  135. 
EQUITY  — 

equitable  remedies  between  partners,  256. 
ESTOPPEL  — 

partnership  by  estoppel,  17. 

liability  for  torts  by,  65. 

partnership  by  holding  out,  65. 

requisite  character  of  holding  out,  67. 
creditor's  knowledge  of  holding  out,  69. 

EVIDENCE— 

of  partnership,  sharing  profits,  16  et  seq. 

sharing  profits  and  losses  as  evidence  of  an  intention  to  be  part- 
ners, 34. 

sharing  both  profits  and  losses  prima  facie  evidence  of  partner- 
ship, 34. 

sharing  profits  with  nothing  said  about  losses,  36. 

sharing  profits  with  stipulation  against  losses,  39. 

sharing  gross  returns,  41. 
EXECUTION  — 

against  partner's  share,  137. 

against  individual  property  for  firm  debt,  208. 
EXPULSION  — 


of  partner,  174. 


F. 


FIRM  — 

capital  of,  see  "Capital." 

as  an  entity,  see  "Entity,"  97. 

name,  see  "Firm  Name." 


350  INDEX. 

References  are  to  pages. 
FIRM  NAME  — 

necessity  of,  102. 

use  and  purpose  of,  103. 

what  name  may  be  adopted,  106. 

in  absence  of  statute,  106. 

statutory  regulation,  108. 
exclusive  right  of  firm  to  trade  name,  170. 
use  of,  after  dissolution,  111. 
liability  on  contracts  executed  in,  196. 
liability  on  bills  and  notes,  197. 
liability  on  sealed  instruments,  198. 
actions  in,  240. 
limited  partnership,  296. 

FIRM  SIGN  — 

in  case  of  limited  partnerships,  296. 

FRAUD  — 

liability  for,  200. 

fraudulent  conversion  of  individual  property,  priorities  in  firm 
assets,  232. 

as  ground  for  dissolution,  270. 
FRAUDS,  STATUTE  OF— 

necessity  of  written  contract  of  partnership,  84. 

FRAUDULENT  CONVEYANCES— 

of  partnership  assets,  224. 
FUTURE  PARTNERSHIPS  — 

contracts  for,  49. 

G. 

GENERAL  PARTNERS  — 

who  are,  82. 

defined,  294. 
GENERAL   PARTNERSHIPS  — 

definition,  76. 

GOOD  FAITH  — 

duty  of  partner  to  observe  good  faith  towards  co-partner,  152. 

GOOD  WILL  — 

compared  with  that  of  individuals,  110. 

rights  after  dissolution,  110. 

is  prima  facie  partnership  property,  121,  122. 

GROSS  RETURNS  — 

agreements  to  share  does  not  constitute  partnership,  41. 
gross  profits,  meaning  of,  42. 


INDEX.  351 

References  are  to  pages. 


GUARANTY  — 

power  of  partner,  192. 


HOLDING  OUT  — 
see  "Estoppel." 

HUSBAND  AND  WIFE  — 
as  partners,  89. 


H. 


I. 


INCOMING  PARTNERS  — 

who  are,  81. 

assumption  of  debts,  210. 
INDEMNITY  — 

right  of  partner  to,  159. 

ho  wand  when  enforced,  162. 
INFANTS  — 

capacity  to  be  partners,  88. 

ILLEGAL  PARTNERSHIPS  — 

partnerships  for  purposes  prohibited  by  law  ,94. 
effect  of  illegality,  95. 

INSANE  PERSONS  — 
as  partners,  88. 

INSANITY  — 

as  ground  for  dissolution,  271. 

INSOLVENCY  — 

fraudulent  conveyances  of  assets,  224. 
dissolution  by  operation  of  law,  262. 

INTENTION  — 

the  real  test  of  partnership,  21. 

what  must  be  intended  to  constitute  partnership,  26. 
sharing  profits  and  losses  as  evidence  of,  34. 
sharing  profits  with  stipulation  against  losses,  39. 
INTEREST  — 

sharing  profits  in  lieu  of,  30. 

right  of  partner  to  interest  on  balances,  164. 

agreement,  express  or  implied,  165. 

in  absence  of  agreement,  on  capital,  166. 

advances,  overdrafts,  and  undivided  profits,  167. 

INTERFERENCE  -r- 

by  special  partner  in  affairs  of  limited  partnership,  297. 


352  INDEX. 

References  are  to  pages. 

J. 

JOINDER  OF  PARTIES  — 
see  "Parties." 

JOINT-STOCK  COMPANIES  — 
definition  and  nature,  11,  290. 
no  delectus  personarum,  11. 
promoters  of,  not  partners,  60. 
principles  of  partnership  applicable,  290. 
statutory  provisions,  292. 

JOINT  TENANTS  — 

partners  are  not,  127. 
JUDGMENT  — 

merger  by,  termination  of  liability,  221. 

L. 

"LAUNCHING"  PARTNERSHIP  — 

partnership  must  be  "launched,"  50. 

LENDER  — 

sharing  profits  in  lieu  of  interest  not  a  partner,  30. 

LIABILITIES  — 

see  "Rights  and  Liabilities." 

LIEN  — 

of  partner,  176. 

partner's  lien  superior  to  rights  of  copartners  and  individual 
creditors,  229. 

LIMITATION  OP  ACTIONS  — 

termination  of  liability  by  limitation,  222. 

LIMITED  PARTNERSHIPS  — 
definition  and  nature,  293. 
sometimes  termed  special  partnerships,  294. 
ordinary  principles  applicable  except  as  modified  by  statute,  293. 
statutory  provisions  in  general,  294. 
general  and  special  partners,  82. 

general  partners  defined,  294. 

special  partners  defined,  294. 
business  in  which  they  may  engage,  294. 
number  of  members  regulated  by  statute,  294. 
certificate  of  formation,  295. 

must  be  acknowledged,  recorded  and  published,  295. 


INDEX.  353 

References  are  to  pages. 

LIMITED  PARTNERSHIPS  (continued)  — 
affidavit,  295. 

contribution  of  general  and  special  partners,  295. 
firm  name,  296. 
firm  sign,  296. 

withdrawal,  alteration,  and  interference,  296. 
necessity  of  compliance  with  statute,-  297. 
dissolution  and  removal,  298. 

LIQUIDATING  PARTNERS  — 
who  are,  81. 

LOSSES  — 

agreements  to  share,  not  necessary  to  constitute  partnership,  36. 

stipulation  against  liability  for,  39. 

agreement  to  share  losses  does  not  constitute  partnership,  45. 


M. 

MAJORITY  — 

must  act  in  good  faith,  171. 
power  of,  171. 

cannot  introduce  new  member  against  will  of  copartner,  7. 

express  agreements  as  to  power,  171. 
matters  within  scope  of  partnership  business,  172. 

power  of,  in  absence  of  agreement,  171. 

change  in  business  or  terms  of  association,  172. 

expulsion  of  partner,  174. 

division  of  profits,  173. 
equal  division,  172. 

MANAGEMENT  — 

right  of  partner  to  participate  in,  151. 

MARRIAGE  — 

of  female  partner,  dissolution  by  operation  of  law,  262. 

MARRIED  WOMEN  — 
as  partners,  89. 

MASONIC  LODGES  — 

members  of,  not  partners,  54. 

MERGER  — 

by  judgment,  termination  of  liability,  221. 

23 


354  INDEX. 

References  are  to  pages. 

MINING  PARTNERSHIPS  — 
no  delectus  personarum,  6,  10. 
transfer  of  shares  not  a  dissolution,  10. 
not  true  partnerships,  10. 
what  constitutes,  10. 

MISCONDUCT  — 

of  partner,  ground  for  dissolution,  272. 

MORTGAGES  — 

power  of  partner,  192. 

N. 

NAME  — 

see  "Firm  Name." 

NEGLIGENCE  — 

duty  of  partner  to  exercise  care  and  skill,  170. 

NEGOTIABLE  INSTRUMENTS  — 

power  of  partners  with  respect  to,  189. 

liability  of  partners  on,  197. 

parties  plaintiff  in  action  by  firm,  241.    - 

NOMINAL  PARTNERS—, 
who  are,  81. 
as  parties  plaintiff,  241. 

NOTICE  — 

to  partner  is  notice  to  firm,  181. 
of  dissolution,  213. 

by  operation  of  law,  214. 

dormant  and  secret  partners,  214. 

torts,  215. 

sufficiency  of,  216. 

NOVATION  — 

as  a  termination  of  liability,  220. 


OSTENSIBLE  PARTNERS  — 
who  are,  79. 

OVERDRAFTS  — 

interest  on,  allowance  in  accounting,  167. 


INDEX.  355 

References  are  to  pages. 

P. 

PARTICULAR  PARTNERSHIPS  — 

definition,  77. 

PARTIES  — 

actions  in  firm  name,  240. 

to  actions  by  and  against  firm,  240. 

actions  by  the  firm,  241. 

contracts  in  the  name  of  one  partner,  243. 

dormant  and  nominal  partners  as  plaintiffs,  242. 

actions  on  negotiable  instruments,  243. 

contracts  under  seal,  parties  plaintiff,  243. 

in  actions  for  torts,  parties  plaintiff,  244. 

disqualification  of  one  partner  to  sue,  245. 
actions  against  the  firm,  247. 

contract  in  name  of  one  partner,  defendants,  249. 

dormant  and  nominal  partners  as  defendants,  248. 

under  statutes  making  obligations  joint  and  several,  248. 

firm  torts,  249. 

PARTITION  — 

partner  not  entitled  to,  133. 

PARTNERS  — 

rights  and  liabilities  of,  see  "Rights  and  Liabilities." 

powers  of  partners,  see  "Powers  of  Partners." 

who  are,  see  "Partnership." 

new  members  cannot  be  introduced  without  consent  of  all,  6. 

delectus  personarum,  6,  7. 

subpartnership,  11. 

liability  of  subpartner  for  debts  of  principal  firm,  12. 
who  are,  13  et  seq. 

sharing  profits  in  lieu  of  salary,  14. 

sharing  profits  in  lieu  or  rent,  14,  31. 

sharing  profits  in  lieu  of  interest,  14,  30. 

servants  or  agents  compensated  by  share  of  profits,  29. 

creditors  receiving  debt  out  of  profits,  29. 

widow  or  child  of  deceased  partner  receiving  annuity  out  of 
profits,  29. 

sharing  gross  receipts,  41. 

sharing  profits,  statutory  provisions,  33. 

sharing  losses  only,  45. 

co-owners,  55. 


356  INDEX. 

References  are  to  pages. 

PARTNERS  (continued)— 

co-owners  dividing  earnings  of  common  property,  43,  44. 

common  stock  or  capital  not  essential,  46. 

contracts  for  future  partnerships,  50. 

test  of  present  or  future  partnerships,  51. 

members  of  Young  Men's  Christian  Association,  54. 

associations  not  for  profit,  53. 

members  of  co-operative  stores,  54. 

members  of  Masonic  lodges,  54. 

stockholders  in  corporations,  58. 

promoters  of  corporations  and  joint-stock  companies,  59. 

stockholders  in  illegal  or  defective  corporations,  61. 
as  to  third  persons,  64. 

by  sharing  profits,  64. 

by  holding  out,  65. 

requisite  character  of  holding  out, 67. 
classification  of,  79. 

ostensible  partners,  79. 

secret  partners,  79. 

dormant  partners,  80. 

silent  partners,  79. 

active  partners,  79. 

normal  partners,  81. 

quasi-partners,  81. 

general  and  special  partners,  82. 

liquidating  partners,  81. 

incoming  partners,  81. 

retiring  partners,  81. 
who  may  become,  87. 

aliens,  87. 

married  women,  89. 

infants,  88. 

insane  persons,  88. 

corporations,  90. 

husband  and  wife  as,  89,  90. 

partnerships  as,  91. 
number  of,  91. 
not  tenants  in  common,  127. 
not  joint  tenants,  127. 

nature  of  interest  in  partnership  property,  127. 
lien  of,  176. 
are  mutual  agents  in  conduct  of  business,  180. 


INDEX.  357 

References  are  to  pages. 
PARTNERSHIP  — 

what  constitutes,  2,  48. 
definition  of,  2. 

not  a  contract,  but  a  status,  3. 
essential  elements,  4. 
contract  between  partners,  4. 

not  formed  by  operation  of  law,  4. 
agreement  not  concluded,  5. 
delectus  personarum,  6,  7. 

mining  partnerships  not  true  partnerships,  10. 
joint-stock  companies  are  partnerships,  11. 
subpartnerships,  11. 

subpartnership  not  a  violation  of  principle  of  delectus 
personarum,  11,  12. 
sharing  profits,  13. 

former  doctrine,  13. 

as  to  third  persons,  13. 
reason  of  the  rule,  14,  15. 
modern  doctrine,  16. 

Cox  v.  Hickman,  13,  16. 
as  to  third  persons,  16,  18. 
tests  of  partnership,  18. 

profit-sharing  as  a  test  of,  16,  17,  18. 
mutual  agency,  19. 
intention  the  real  test,  21. 

what  must  be  intended,  26. 

common  ownership  of  profits,  26. 
ultimate  test,  common  ownership  of  profits,  26. 
a  question  of  construction  of  contract,  28. 
arbitrary  tests  no  longer  used,  28. 
sharing  profits,  statutory  provisions,  33. 
sharing  profits  and  losses  as  evidence  of  intention,  34. 
sharing  both  profits  and  losses,  34. 
sharing  profits  with  nothing  said  about  losses.  36. 
sharing  profits  with  stipulation  against  losses.  39. 
sharing  gross  returns,  41. 
sharing  losses  only,  45. 
common  stock  or  capital,  46. 
what  constitutes,  questions  of  law  and  fact,  2,  48. 
contracts  for  future  partnerships,  49. 
when  it  begins,  50.    S 
conditions  precedent  to  commencement  of,  51. 


358  INDEX. 

References  are  to  pages. 
PARTNERSHIP  (continued)  — 

test  of  present  or  future  partnership,  51. 
good  faith  required,  53. 
associations  not  for  profit,  54. 
co-ownership  distinguished,  55. 
corporations  distinguished,  58. 

promoters  of  corporations  or  joint-stock  companies,  59. 
stockholders  in  illegal  or  defective  corporations,  61. 
as  to  third  persons,  64. 
hy  sharing  profits,  64. 
by  holding  out,  65. 

requisite  character  of  holding  out,  67. 
creditor's  knowledge  of  holding  out,  69. 
liability  for  torts,  74. 
classification  of  partnerships,  75. 
ordinary  partnerships,  75. 
joint-stock  companies,  75,  290  et  seq. 
limited  partnerships,  75,  293  et  seq. 
universal  partnerships,  definition,  76. 
general  partnerships,  definition,  76. 
special  or  particular  partnerships  defined,  77. 
trading  and  nontrading  partnerships  defined,  78. 
partners  classified,  79. 
as  partners,  91. 

purposes  of  any  lawful  business  for  profit,  93. 
illegal  partnerships,  94. 

effect  of  illegality,  95. 
firm  as  an  entity,  97  et  seq. 
firm  name,  102  et  seq. 

PARTNERSHIP  PROPERTY— 

priorities  in  distribution  of,  see  "Priorities." 
distinguished  from  capital,  113. 
what  is,  113,  118. 

depends  upon  intention,  118. 

depends  on  express  or  implied  agreement,  119. 

capital  of  firm  as,  113,  120. 

land  purchased  by  co-owners  out  of  profits,  118. 

co-owners,  partners  in  profits  of  common  property,  122. 
how  title  is  held,  123. 

personalty,  123. 

realty,  124. 
nature  of  partner's  interest,  127. 


INDEX.  359 

References  are  to  pages. 
PARTNERSHIP  PROPERTY  (continued)  — 

death  and  survivorship,  128,  129. 

partner's  interest  is  net  balance  after  settlement,  131. 

legal  title  to  realty  held  as  tenants  in  common,  131. 

realty  chargeable  with  partnership  debts,  131. 

realty  chargeable  with  balance  due  partners,  131. 

beneficial  interest  in  realty  or  equitable  title  passes  to  sur- 
vivors on  death  of  partner,  132. 
sale  or  partition,  133. 

no  right  to  partition,  133. 

partners  entitled  to  sale,  133. 
proportionate  share  of  each  partner,  135. 

shares  presumed  equal,  135. 
conversion  of  realty  into  personalty,  140. 
changing  joint  into  separate  property  and  vice  versa,  146. 

PAYMENT— 

terminates  liability  for  past  acts,  217. 

PENALTIES— 

liability  for  penalties  incurred  by  one  partner,  200. 

PERSONAL  PROPERTY— 

how  title  is  held  by  partnership,  123. 
conversion  of  firm  realty  into,  140. 

POWERS  OF  PARTNERS— 

after  dissolution,  see  "Dissolution." 
actual  authority,  179. 

principles  of  agency  control,  180. 

notice  to  partners  is  notice  to  firm,  181. 

admissions  and  representations,  181. 
apparent  or  implied  authority,  182. 
agreement  restricting  powers  or  partner,  183. 
particular  powers,  185  et  seq. 

in  trading  partnerships,  188. 

as  to  negotiable  instruments,  189. 

arbitration,  191. 

as  to  deeds,  191. 

to  transfer  undivided  interest  in  property,  128. 

to  sell  specific  partnership  property,  128. 

mortgages,  192. 

assignments  for  benefit  of  creditors,  192. 

confession  of  judgment,  192. 
restriction  by  dissent,  193. 


360  INDEX. 

References  are  to  pages. 
PREMIUM— 

consideration  of  contract  of  partnership,  93. 

PRIORITIES— 

in  distribution  of  firm  assets  at  law  and  in  equity,  227. 

in  firm  property,  229. 

firm  creditors  have  priority,  229. 

partner's  lien  superior  to  individual  creditors,  229. 
partner's  lien  superior  to  claims  of  copartners,  229. 
exceptions  to  rule,  conversion  of  firm  into  separate  prop- 
erty, 232. 
separate  business,  233. 

fraudulent  conversion  of  individual  property,  232. 
partners  are  prior  to  individual  creditors,  233. 
partners  discharged  in  bankruptcy,  233. 
in  separate  property,  234. 

separate  creditors  have  priority  in  separate  property,  234. 
exceptions  to  rule,  236,  237,  238. 

no  joint  estate  nor  living  solvent  partner,  236. 
fraudulent  conversion  of  firm  property  by  partner,  237. 
separate  business,  237. 
secret  partnerships,  237. 
individual  creditors  have  priority  over  firm,  237. 
firm  debts  have  priority  over  debt  to  copartner,  238. 
individual  debts  have  priority  over  debt  to  copartner,  238. 

PROFITS— 

sharing  profits  as  common  owners  constitutes  partnership,  2. 
sharing  profits  as  a  test  of  partnership,  18. 

former  doctrine,  13. 

partnership  as  to  third  persons  by  sharing  profits,  13. 

modern  doctrine,  16. 

Cox  v.  Hickman,  13,  16. 
statutory  provisions,  33. 

sharing  both  profits  and  losses  prima  facie  evidence  of  part- 
nership, 34. 

sharing  profits  with  nothing  said  about  losses,  36. 

sharing  gross  returns,  41. 
associations  not  for  profit  are  not  partnerships,  53. 
right  of  partner  to  obtain  private  profit,  154. 
interest  on  undivided  profits,  167. 
division  of,  173. 

PROPERTY— 

see  "Partnership  Property." 


INDEX.  361 

References  are  to  pages. 

PROVINCE  OP  COURT  AND  JURY— 

partnership  a  mixed  question  of  law  and  fact,  48. 

Q. 

QUASI  PARTNERS— 
who  are,  81. 
equivalent  to  prior  consent  to  transfer  of  shares,  8. 

R. 

REALTY— 

partnership  property,  how  title  held,  124. 
legal  title  held  as  tenants  in  common,  131. 
conversion  of  firm  realty  into  personalty,  140. 

RELEASE— 

as  a  termination  of  liability,  219. 
RENEWAL— 

limited  partnership,  298. 
RENT— 

sharing  profits  in  lieu  of,  31. 
REPRESENTATIONS— 

of  partner,  when  binding  on  firm,  181. 

RETIRING  PARTNERS— 
who  are,  81. 

right  to  engage  in  competing  business,  110. 
RIGHTS  AND  LIABILITIES— 

after  dissolution,  see  "Dissolution." 

notice  of  dissolution,  see  "Dissolution." 

priorities  in  firm  and  separate  property,  see  "Priorities." 

of  partners,  grounds  of,  17. 

of  subpartners,  12. 

promoters  of  corporations  or  joint-stock  companies,  59. 

stockholders  in  illegal  or  defective  corporations,  61. 

partnership  by  holding  out,  65. 

for  torts  by  holding  out,  65,  74. 

of  partners  as  to  capital,  115. 

partnership  prpoperty,  118. 

of  partners  inter  se,  147  et  seq. 

articles  of  partnership,  147. 

usual  provisions  in  articles,  148. 

construction  or  articles,  149. 


302  INDEX. 

References  are  to  pages. 

RIGHTS  AND  LIABILITIES  (continued)  — 

right  to  participate  in  management,  151. 

duty  to  observe  good  faith,  152. 

obtaining  private  benefits,  154. 

information  acquired  as  partner,  156. 

right  to  carry  on  separate  business,  157. 
competing  business,  157. 
noncompeting  business,  158. 

right  to  contribution  and  indemnity,  159. 

limit  as  to  amount  of  contribution,  161. 

contribution  in  illegal  transactions,  161. 

how  and  when  enforced,  162. 
right  to  compensation  for  services,  162. 
right  to  interest  on  balances,  164. 

agreement  express  or  implied  to  pay  interest,  165. 

interest  in  absence  of  agreement,  capital,  166. 

interest  on  advances,  overdrafts  and  undivided  profits, 
167. 
inspection  of  accounts,  168,  169. 
duty  to  keep  partnership  accounts,  168,  169. 
duty  to  conform  to  partnership  articles,  169. 
duty  to  exercise  care  and  skill,  170. 
power  of  majority,  171. 

express  agreement,  171. 

of  majority  in  absence  of  agreement,  171. 

matters  within  scope  of  partnership  business,  172. 

change  in  business  or  terms  of  association,  172. 
division  of  profits,  173. 
expulsion  of  partner,  174. 
partner's  lien,  176. 
as  to  third  persons,  179. 

power  of  partner  to  bind  firm,  179. 

actual  authority,  179. 

notice  to  partner  is  notice  to  firm,  181. 

admissions  and  representations,  181. 

apparent  or  implied  authority  of  partner,  182. 

agreement  restricting  powers  of  partner,  183. 
particular  powers,  185. 

as  to  negotiable  instruments,  189. 

in  trading  partnerships,  188. 

assignment  for  benefit  of  creditors,  192. 
restriction  by  dissent,  193. 


INDEX.  363 

References  are  to  pages. 

RIGHTS  AND  LIABILITIES  (continued)— 
liability  on  contracts,  195. 
bills  and  notes,  197. 
sealed  instruments,  198. 
reception  of  benefit  by  firm,  198. 
for  torts,  frauds  and  breaches  of  trust,  200. 

misapplication  of  money  or  property  received  for  or  in  cus- 
tody of  firm,  202. 
employment  of  trust  money  for  partnership  purposes,  204. 
liability  for  crimes,  205. 
nature  of  liability,  206. 

joint  and  several  liability,  206. 
on  firm  contracts,  206. 
statutory  changes,  206. 
torts  and  breaches  of  trust,  207. 
extent  of  liability,  207. 

statutory  limitation  of  liability,  207,  209. 
stipulations  limiting  liability,  209. 
execution  against  individual  property,  208. 
limited  partnerships  and  joint-stock  companies,  209. 
commencement  of  liability,  209. 
of  incoming  partner,  209. 
assumption  of  debts,  210. 
termination  of  liability,  212. 
for  future  acts,  212. 

terminated  by  dissolution,  212. 
notice  of  dissolution,  when  necessary,  213. 
for  past  acts,  217. 
payment,  217. 
release,  219. 
novation,  220. 
merger  by  judgment,  221. 
bankruptcy,  222. 
limitations,  222. 
application  of  assets  to  liabilities,  223. 
application  by  partners,  223. 
application  by  court,  227. 
priorities  in  firm  property,  229. 

firm  creditors  have  priority,  229. 
partner's  lien,  229. 

exceptions  to  rule,  conversion  of  firm  into  separate  prop- 
erty, 232. 


364  INDEX. 

References  are  to  pages. 

RIGHTS  AND  LIABILITIES  (continued)  — 

fraudulent  conversion  of  individual  property,  232. 
separate  business,  233. 
partners  discharged  in  bankruptcy,  233. 
partners  are  prior  to  individual  creditors,  233. 
priorities  in  separate  property,  234. 

separate  creditors  have  priority  in  separate  property,  234. 

s. 

SALE— 

partner  entitled  to  sale  of  property  on  winding  up,  133. 

SEALED  INSTRUMENTS— 
liability  on,  198. 
parties  to  action  on,  243. 

SECRET  PARTNERS— 

who  are,  79. 
SEPARATE  PROPERTY— 

changing  joint  into  separate  and  vice  versa,  146. 

SERVANTS— 

sharing  profit  in  lieu  of  salary  not  partners,  29. 

SHARES— 

transfer  of,  effect,  8. 

consent  to  admission  of  transferee  as  partner  necessary,  8. 

in  mining  partnerships  may  be  transferred  without  consent 
of  copartners,  10. 

in  joint-stock  companies  transferrable,  11. 
capital  of  each  partner  distinguished  from  partner's  share,  114. 
definition  of  partner's  share,  127. 
nature  of  interest  in  partnership  property,  127. 

partner's  interest  is  net  balance  after  final  settlement,  13L 

in  realty  and  personalty  the  same,  132. 
proportionate  share  of  each  partner,  135. 

presumption  of  equality,  135. 
attachment  for  individual  debt,  137. 

SHARING  PROFITS— 
•    see  "Profits." 

partnerships  as  to  third  persons  by  sharing  profits,  64. 

SILENT  PARTNERS— 
who  are,  79. 


index.  365 

References  are  to  pages. 
SKILL— 

duty  of  partner  to  exercise,  170. 

SOCIETIES— 

members  of,  not  partners,  53. 

SPECIAL  PARTNERS— 
who  are,  82. 
defined,  294. 

SPECIAL  PARTNERSHIPS— 

see,  also,  "Limited  Partnerships." 
definition,  77. 

SPECIFIC  PERFORMANCE— 

of  agreement  of  partnership,  258. 

STATUTE  OF  FRAUDS— 

necessity  of  written  contract  of  partnership,  84. 

STIPULATIONS— 

limiting  liability  of  partners,  209. 

STOCKHOLDERS— 

in  corporation  not  partners,  58. 

in  illegal  or  defective  corporations,  61. 

SUBPARTNERSHIPS— 
defined,  11. 

delectus  personarum,  11,  12. 
liability  for  debts  of  principal  firm,  12. 

SURVIVING  PARTNER— 

takes  assets  charged  with  trust,  129. 
rights  and  liabilities  of,  280  et  seq. 
rights  in  respect  to  firm  name,  111. 
particular  powers,  282. 
actions  by  and  against,  284. 
liability  to  estate  of  decedent,  285. 

must  account  to  representatives  of  deceased  partner,  130. 
right  to  compensation,  285. 

SURVIVORSHIP— 

death  of  partner,  128. 

legal  title  does  not  survive,  but  descends  to  heirs,  132. 
equitable  title  or  beneficial  interest  passes  to  survivors  for  part* 
nership  purposes,  132. 


3GG  INDEX. 

References  are  to  peses. 

T. 

TITLE— 

to  partnership  property,  how  held,  123. 
TORTS— 

liability  for,  200. 

by  holding  out,  65,  74. 

misapplication  of  money  or  property  received  for  or  in  cus- 
tody of  firm,  202. 
employment  of  trust  money  for  partnership  purposes,  204. 
contribution  between  partners  for,  161. 
joint  and  several  liability,  206,  207. 


actions  for,  parties  plaintiff,  244. 
parties  defendant,  248,  249. 

TRADING  PARTNERSHIPS— 
what  are,  78,  188  et  seq. 
power  of  partners,  188. 
TRANSFER— 
(  of  shares,  see  "Shares." 

of  partner's  interest,  effect,  128. 
works  dissolution,  269. 

TRUST— 

liability  for  breach  of,  200. 

employment  of  trust  money  for  partnership  purposes,  204. 

joint  and  several  liability  for  breach  of,  207. 

U. 

UNIVERSAL  PARTNERSHIP— 

definition,  76. 

w. 

WIDOW— 

dower  in  partnership  realty,  145. 

WITHDRAWAL— 

of  contribution  to  limited  partnership,  296. 


YOUNG  MEN'S  CHRISTIAN  ASSOCIATION— 
members  of,  not  partners,  54. 


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